If you are casually hanging around with £1.8 million pocket and wondering what on earth to do with it, then when it comes to the property market, you have two choices: buy a three bedroom house in London or buy 25 three bedroomed houses in Scotland.
A survey by Hometrack covered 376 council areas around the country and found that a family home in the London borough of Kensington and Chelsea would sell for nearly £2 million, where as a similarly sized family home in East Ayreshire would sell for just £72,500.
The results of this survey really highlighted how northern areas such as Glasgow, Birmingham and Edinburgh trailed far behind even the most affordable areas of London. Liverpool was found to be the cheapest area in the country.
Last month the average house price rose to £250,000, which is still over three times the price of a family home in Ayrshire. The second cheapest place was Falkirk in Scotland, where a three bedroom home would only set you back by £78,000.
The data also showed exactly what earnings were required to afford a property in Kensington and Chelsea, and for a three bedroom house that would be a whopping £462,214 a year, before tax. If you wanted to buy a house in Ayrshire however, you would only need to be earning £18,617 a year.
Experts have said that this survey clearly demonstrates how there is an increased pressure on families and couples who live in London and the South East and need to earn more to be able to afford a suitably sized home.
Areas such as Camden and Hammersmith are now pretty much no-go areas for residential sales, as families are unable to meet the offers from wealthy buyers – research by Savills found that one third of resale transactions in these desirable areas was from foreign buyers.
This report comes after the Chancellor has been called on to cut down stamp duty and now Mark Carney, the Governor of the Bank of England, faces more pressure to raise interest rates to slow down the tensions in the property market.
Richard Donnell from Hometrack told The Telegraph he believed the inner London market was being “driven by cash purchases and interest-only mortgages, which aren’t available to everyone” and that further down the price ladder “where both partners are having to work hard to buy, then borrowing or debt becomes an important part of their buying power. This recovery could run out of steam when it gets to Middle England because I’m not sure people want to take on more debt.”
There is no sign of the continual house price inflation abating, with the average price rising more in February than at any other time in the last 21 months.
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