East Midlands affordability stable
The latest set of results show that AFF£X now stands at 87.0, a 0.16 per cent improvement on the last quarter.
This quarter’s figures reveal that house price growth has been backed up by a healthy local jobs market.
Steve Midgley, managing director of Fairgrove Homes, said: “The East Midlands is one of the few regions that offers a housing market that is inclusive for all sectors of society. Unlike other parts of the country, key workers are not being priced out of the market. This is mainly because average incomes have grown at a faster rate than new home prices, which is great news for first-time buyers.”
New home prices in the region now stand at an average 3.7 per cent higher than two years ago.
Rob Clifford, chief executive of Mortgage Force, said: “In the short term, this is a sustainable level of growth, which matches the Consumer Price Index (CPI) rate of growth for the same period. Understandably, some investors may be concerned that the price of a new home has risen at a much smaller rate than three or four years ago. However, smaller levels of growth make volatile house prices – which are not good for the housing market or the wider economy – less likely.”
Average monthly mortgage payments are now only £35 per month greater than two years ago.
Steve Midgley commented: “This represents an average 3.49 per cent increase in repayments. However, this is well within affordability levels taking into account the larger increase in the average regional income. It also means that the price of new homes is rising at a faster rate than the level of repayments. Furthermore, this compares very favourably with the cost of rent for the same period. Rental costs have seen double-digit growth in the past two years, with rent on an average new home soaring by around £130 per month – an increase of 30 per cent on 2004.”
This quarter’s developments provide a good indicator of the health of the region’s economy.
Rob Clifford added: “With average incomes well up on 2004, there should be a greater amount of confidence among home buyers as well as the business community regarding the region’s employment situation. Some of the initiatives from the East Midlands Development Agency (EMDA), such as providing funding to help businesses expand in the region, is helping safeguard jobs in the long term.”
Steve Midgley concluded: “One of the most interesting features of this quarter’s figures is the strength of Derbyshire within the region. Monthly earnings in the county have increased by an estimated 3 per cent more than in Nottinghamshire over the period. Although Leicestershire workers still enjoy higher levels of income than their counterparts in Derbyshire and Nottinghamshire, the gap is definitely closing – and Derbyshire is reaping the benefits of this upturn in employment conditions, a factor that we expect to see continuing throughout 2006.”