House prices are rising too quickly in the North East for people to get on the property ladder, a pressure group has warned.
The North East Home Truths report published by the National Housing Federation warns that house prices have risen two-and-a-half times quicker than average wages in the last decade, pushing home ownership and private rents out of reach for local workers.
The study reveals that the average wage rise by just 33% between 2002 and 2012, but house prices have rocketed by 83%. Houses in Newcastle are now more than nine times the average income while in Northumberland and North Tyneside they are eight times higher.
The report blames the North East’s affordability crisis on the housing shortage in the region, with the Federation saying that less than two thirds (60%) of the homes the region needs are being built.
It adds that with house prices and rents rising so rapidly, more people are having to rely on Government help to stay in their homes.
The number of people claiming housing benefit in the region has doubled between 2009 and 2013, the Federation says, with most of the money going to private landlords instead of being spent on new affordable homes.
Monica Burns, North East external affairs manager for the National Housing Federation, said: “High house prices, rising rents and stagnant wages in the North East are not only making life extremely difficult for people living and working in the region, but they are also affecting employers and businesses and risk holding back economic growth. Workers in the region are becoming a generation of renters, unable to get on the housing ladder and faced with continually rising rents.
“With more support, housing associations across the North East can be real catalysts for change for local communities. They are in it for the long term and can actively drive forward a balanced economic recovery.”
The report comes as a financial website warned that people searching for a new mortgage are seeing the rates charged on two-year fixed-rate deals rise at their fastest pace in over two years.
The hikes mean that someone applying for a two-year fix on April 1 would have typically been offered a rate of 3.52%, but by April 30 this would have jumped to 3.61% on average, according to Moneyfacts.co.uk.
Also yesterday international think-tank The Organisation for Economic Co-operation and Development (OECD) warned that action in the UK may be needed to cool the housing market.