ROOF Blog

Fifty years ago, the average home cost £2,507 and one in seven had the loo outside. A half century on, the average home costs £162,085 but spare a thought for the two in every 1,000 households that still rely on an outside loo, according to research published by Halifax. The decade-by-decade data paints a picture of Britain today more divided than ever by regional house price differences. Halifax found that the region with the lowest prices in 1960 – Yorkshire and Humberside – remains the lowest, but said that every region in Britain has fallen further and further behind London. It said the difference was down to the rise in real earnings, which have increased more in Greater London than in any other region. However, incomes have failed to keep pace with rampant property prices everywhere. Halifax found that prices rose by 273 per cent in real terms between 1959 and 2009. Over the same period, the growth in real earnings was 169 per cent.

Thousands of households have taken out loans with interest rates averaging 825% during ‘the worst Christmas in a generation’ for illegal doorstep lending, according to a new report. ‘The Real Cost of Christmas’, commissioned by affordable housing provider Circle Anglia and written by the Financial Inclusion Centre, found that more than 100,000 of the UK’s poorest families will spend 2010 crippled with a combined debt of around £82m after borrowing money from loan sharks to pay for Christmas. The value of the loans is an estimated £29m, but average interest rates of 825% will mean that people end up paying nearly three times the initial amount they borrowed.

With demand for gas rising sharply, Britain’s gas reserves are running low, meaning the country is more reliant on imported gas bought on the international market. Imported energy is more expensive, and rising demand across Europe this week caused natural gas prices to jump to their highest level in 10 months. That triggered warnings from energy analysts that power companies may use the cold snap as justification for another increase in domestic bills. Tom Foulkes, director general of the Institution of Civil Engineers said: ‘To avoid energy crises and price hikes in the future the UK energy sector must urgently build extra gas storage capacity into the network. We simply cannot continue to rely on unpredictable overseas supplies’.

New research has highlighted that only half of households facing repossession orders actually attend their court hearings. There is also an indication that repossessions are not being considered the option of last resort by the courts. The research, undertaken by CIH’s consultancy arm, ConsultCIH, looked at hundreds of repossession orders made in 2008. The research found that many households are in denial about losing their homes. Conversely, others believe the loss of their home is a foregone conclusion by the time their case gets to court.

The recession’s toll on consumers will be laid bare today as Bank of England figures show that nearly a third of workers have had their household income drop by at least £1,200 a year amid soaring unemployment, shorter working hours and pay freezes.

About 30 per cent of manual workers and 27 per cent of office workers said that their disposable income – money left to spend each month after paying tax, housing costs, utility bills and loan payments – had fallen by £100 or more over the past 12 months, according to the Bank’s ‘Quarterly Bulletin’.

Average household wealth in the south-east of England is almost twice that in Scotland, according to the Office for National Statistics’ (ONS) first ‘Wealth in Great Britain’ report, which also found that London was not as wealthy as you might think.

The ONS painted a detailed picture of affluence and borrowing habits after collecting evidence from 31,000 households across Britain and estimating the value of their housing, pension investments and other possessions.

For many of the respondents to the survey, accumulating a healthy portfolio of assets was a distant dream: the least wealthy 10 per cent of households had negative total net wealth – owing more on their mortgages or other loans than their properties and other goods are worth.

The era in which all Britons aspire to own their own home may be coming to an end, according to the Housing minister, John Healey.

In a controversial speech, he suggested that Britain may be moving towards a European model, with renting on a roughly equal footing with buying.

He said home ownership had fallen from 71 per cent of households in 2003 to 68 per cent today, noting that this trend began in 2005, well before the recession.

A new model with greater flexibility is needed, he argued, allowing people to change from buying to renting without moving home.

‘Not all or nothing, but a flexible system which suits the different stages in people’s lives,’ he said.

The true extent of the financial pain that will be felt by households and public services over the next few years has been laid bare by the Institute for Fiscal Studies (IFS).

Even those on half typical earnings will see their living standards suffer as a result of the Chancellor’s policies, the think-tank warns. 

To protect the ‘ringfenced’ areas of hospitals, schools and the police, there will have to be savage cuts to defence, housing, transport and higher education budgets.

Cuts of almost seven per cent a year, 20 per cent over three years, mark the severest squeeze since the Second World War, tougher than anything in the austerity years of the 1970s or early 1980s.

The IFS analysis of the Chancellor’s pre-Budget report also shows a £76bn ‘black hole’ in the public finances; that fixing it will cost every family £2,400 a year; and that only those on less than £14,000 will be better off as a result of the changes.

The monthly Halifax house price index shows that house prices jumped by a bigger than expected 1.4 per cent in November, spurred on by higher demand and a shortage of properties for sale.

The increase was the fifth successive monthly rise with prices more than four per cent higher over the first 11 months of the year. The average cost of a house in the UK is now £167,664.

However, that is still 1.6 per cent cheaper than this time last year, and the recovery in house prices that we’ve seen in the past six months is unlikely to be sustained next year, analysts warned.

Seema Shah, a property economist at Capital Economics, said: ‘With the economic recovery likely to be lacklustre, unemployment set to rise and household incomes likely to be under downward pressure from pay freezes, house price falls remain the most likely outcome next year.’

In the build-up to the pre-Budget report this Wednesday, Pricewaterhouse Coopers (PWC) says the typical British family already faces a decline of 2.4 per cent, or £300 a year, in its discretionary spending power, after tax, mortgages, food and other essentials.

The best-off will see their spending power cut by as much as nine per cent, almost £5,000 a year, the most vicious assault on their living standards in three decades.

The impact of swingeing income tax and national insurance hikes, VAT increases, expected moves back to more normal mortgage rates and higher petrol and transport costs, thanks to the latest boom in world oil prices, will all conspire to devastate the household budgets of the better-off.