The dream of owning a home has grown increasingly out of reach for many in York, as a new report reveals a staggering increase in the gap between average earnings and house prices over the last quarter-century.

Twenty-five years ago, in 1997, buying a house in York might have seemed an achievable goal for the average earner. Back then, the average house cost £57,500—only £41,998 more than the average salary of £15,502. Fast forward to 2023, and the picture had drastically changed. The average house price had surged to £300,000, a whopping £265,891 more than the median salary of £34,109. This means that while salaries have risen by 220%, house prices have shot up by more than five times.

The Impact on York

Councillor Michael Pavlovic, York’s executive member for housing, paints a grim picture of the consequences of this disparity. According to Pavlovic, the dream of homeownership is slipping away for many, especially the younger generation. The ripple effects extend to the rental market, where soaring prices are consuming a larger portion of household incomes, leading to a noticeable decline in living standards for those who aspire to own a home.

York now finds itself at the top of the list for the highest average house prices in Yorkshire and the Humber, with affordability rates comparable to some regions in the south of England, known for their high cost of living.

A National Crisis

Adam Corlett from the Resolution Foundation warns that Britain’s housing crisis is likely to dominate the upcoming election campaign. The UK’s housing woes, characterized by high costs, poor quality, and lack of security, rank it as offering the worst value for money among advanced economies. Corlett stresses that the issue is decades in the making, a result of consistent underinvestment in new housing and modernization of existing stock.

The Role of Foreign Investment

Research by Dr. Filipa Sa at King’s College London suggests that foreign investment has significantly influenced house prices. According to her findings, England and Wales would have seen house prices 19% lower between 2000 and 2014 in the absence of foreign investment. This is not a challenge unique to the UK; other countries are grappling with similar issues and have introduced policies to curb foreign investment in the housing market.

Government Response

In response to the housing affordability crisis, the government has announced new measures in its latest budget, focusing on accelerating housing delivery. A notable initiative includes a £20 million investment to support the construction of 2,000 to 3,000 new homes and bolster the capacity of local community groups to contribute to housing delivery. Additionally, the government is increasing the funding cap for affordable housing projects, signaling a commitment to addressing the affordability gap.