As promised, I’m writing a few more articles about the Cost of Living crisis and so in this next article I talk a little about the cost of housing. You may have seen in the news that TV presenter Kirsty Allsopp has suggested that concerns about housing are overblown. She has argued that getting on the housing ladder isn’t a problem. You may need to stay at home a little bit longer and you may need to cut back on luxuries but essentially it’s possible to find somewhere you can afford if you are willing to make sacrifices. One sacrifice she suggested was a willingness to relocate from the South of England to northern towns or cities where the cost of housing is lower.
Whilst the argument may be a little bit more complex than the way some are presenting it as “give up your Netflix subscription to buy a house.” The general tone of her argument is that getting a house isn’t really that hard.
Well, here in the West Midlands, we aren’t quite in the north and so prices are a long way short of what you might pay in Bradford or Oldham but certainly nowhere near as high as the South East. Even still, for a first home, you are probably looking at paying between £150,000 – £200,000. Is that achievable?
Well, in order to buy a house, you need to be able to cover the cost through two sources, a mortgage that you will have to pay off and a deposit. The average UK Salary is around about £31000 at the moment, however, that’s the medium covering all salaries regardless of location or length of service. For those under 30, the average drops to just under £27000. Currently, a mortgage lender would probably be willing to loan around about £120,000 to someone on that kind of income. Remember that’ we are talking about the medium income here, so many workers will earn substantially less. For comparison, if you are earning £23000 then the size of loan falls to about £103000. You are going to need to find anywhere between £30,000 and £80,000 deposit in order to secure your first home.
It is true of course that many couples seeking to get onto the housing ladder will have two incomes coming in. However, should they have children and prefer for one of them to be at home for the family then that will substantially reduce their income.
Supposing you were able to secure a loan of £120k, this also means that you are likely to be paying back circa £500 per month. However, that figure is based on a situation where interest rates are unusually low and we are expecting them to increase in response to rising inflation over the next year.
Until you are able to purchase your own home, you are likely to find yourself paying rent. In our area, you are looking at between £750 -£900 per calendar month for a two – three bedroom home. This means that for someone on £27000 who would be taking home about £1800 per month, they are likely to be putting about half of their income into paying rent. On top of that, they will need to find council tax and contents insurance. They’ll then have all the household bills to pay including rising fuel and food costs. There is unlikely to be much left at the end of the month to put into saving up for that deposit.
It’s worth bearing this in mind when we think about this specifically in the context of Christian life and the church. Christians may well expect to give a proportion of their income towards Gospel work. However, the world around them is likely to see their tithe as another luxury akin to their gym membership. Christians are going to need to make big decisions about their priorities.
It’s finally worth responding to the suggestion that people can simply relocate in order to find an affordable home. That all sounds well and good in practice until we remember two things. First of all, we are in what is called a “hot market” where there is greater demand than supply can match. This is helping to inflate prices and it means that buyers face heavy competition. When we bought our first house, it was a buyer’s market and I remember us travelling up to the West Midlands to meet an estate agent who set aside a whole morning to take us round various houses. I can’t imagine that happening now. Instead we have had to persuade estate agents that we are financially solvent and then join the queue to see a house. Instead of the estate agent expecting to take one person round lots of houses, she now expects to take a lot of viewers round one house.
Relocation is a brilliant idea in theory. I relocated back in the 1990s but to find work not housing. There in lies the problem. People tend to go where the work is and unsurprisingly, that pushes demand for prices up in those areas. If there were suddenly more jobs in the north and more people buying there, then house prices would go up quickly.
Add in to the equation that relocation may involve uprooting a young family and moving them away from school, friends, family. It means leaving behind community and support networks. For Christians it means leaving your church.
Allsop’s comments may sound brilliant in theory but not so good in practice.