National living wage hike ‘doesn’t touch the sides’ of housing affordability crisis



The increase to the national living wage from £8.91 to £9.50 will make little difference in helping prospective buyers save for a deposit, Wayhome analysis shows.

The change means that from April the minimum salary will move from £17,963 to £19,152 for over-23s working standard 40 hour weeks.

Meanwhile the national minimum wage for people aged 21-22 will rise from £8.36 to £9.18 an hour, while the Apprentice Rate will increase from £4.30 to £4.81 an hour.

The change will give more than 5 million public sector staff, including police, teachers and the armed forces, a payrise.
The average first-time buyer property price in Great Britain was £220,460 as of August 2021, meaning the increase will do little to change people’s chances of getting on the housing ladder.

The time required for people on the National Living Wage to save for a deposit for the average first-time buyer property in GB would be reduced from 43.9 years to 40.1 years for a single earner, and from 13.2 to 11.3 years for two earners.

However, these numbers assume that property prices won’t change and that salaries remain the same.

Nigel Purves, chief executive of Wayhome, said: “While it’s promising that the National Living Wage is set to increase, this doesn’t touch the sides in helping aspiring homeowners to settle down with their families in homes they love, in the places they want to live.

“Restrictive lending rules mean banks will only lend around 3.5x income, so anyone without access to the Bank of Mum & Dad is looking at decades of saving before traditional routes to homeownership are accessible.

“There is no magic wand here. We need innovation in housing affordability, and fast. We must create an economic environment which enables people who earn the national living wage, and who are able to save reasonably, to take their first step onto the property ladder.”

 

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