With house prices to continuing to escalate, Hometrack indicated that private rents in 2006 were two thirds the cost of a 100 per cent mortgage on a two or three bedroom house, within its ‘Can’t buy: Can rent – the affordability of private housing in Great Britain’ study.
Professor Steve Wilcox, who carried out the study, stated that the research proved that the UK economy was forcing young aspiring buyers down the rental route. He said: “Not too long ago there was little difference between the costs of buying and renting.
”But while house prices tripled since 1994, private sector rents only increased in line with earnings and the costs of renting have as a result fallen relative to the costs of buying.”
According to Hometrack, the average cost of a home in England and Wales reached £176,300, while mortgage costs as a percentage of income also increased, to 32 per cent.”
Richard Donnell, Hometrack’s director of research, added: “The affordability problems highlighted in this research are largely a result of an unbalanced and inflexible supply of homes which has led to high entry costs for housing. While the Government has recently set out new targets for house building this research highlights the importance of developing the right type of housing in the right forms of tenure. The private rented sector is taking much of the strain and while the rental market has grown in recent years, it is clear that this growth needs to be sustained to ensure adequate housing choice for those priced out of the market.”
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