Finding a safe home for hard-earned income

By Wednesday April 19th, a UK citizen, on an average income, had earned £7,789 from their day job so far this year. 

That is the same amount as a UK citizen, owning a home worth £229,100 (the average price at the start of the year), is predicted to earn from house price growth during 2017. 

In other words, the simple fact of owning a home in the UK generates as much income in 12 months as putting in a 35-hour week for almost a third of a year.  

We did these calculations at the start of the year, when the Office for Budget Responsibility forecast house price growth of 3.4% for the UK. For the average home in London, that rate of growth would translate into earnings of £16,000 by the end of 2017 – more than 60% of the average median household income of £26,400 per annum. 

Small wonder then, that so many people aspire to home-ownership in the UK and that parents seem keen to encourage their offspring onto the housing ladder. According to the latest English Housing Survey, the number of first-time buyers is rising but 29% of them had help from family and friends to raise their deposit. 

If you factor in rental income of around 4% per annum on top of capital growth, property ownership can look even more appealing. A couple in early retirement today, who bought a home in 1975 would have paid an average of £10,388, (adjusted for inflation, that’s just over £85,000) and that same average home today would cost £229,100. 

When compared to the roller coaster ride of the stock market, house price growth looks solid. Over the last 20 years, (UK HPI Feb 1997-Feb 2017), house prices have grown by 76% across England and Wales while the FTSE has risen by 66% with a roller coaster of ups and downs along the way. 

Of course, there are no guarantees that prices continue to rise and there are costs associated with the purchase and maintenance of housing so there are undoubtedly risks attached but, in the experience of most homeowners, there is no safer place to invest their hard-earned income.

**This article was compiled by Dataloft Director Sandra Jones

**Dataloft are a team of top property industry analysts - they see the story in statistics. See their latest regional market snapshot here.