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KEY WORKERS PRICED OUT OF TOWNS

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65% OF TOWNS UNAFFORDABLE FOR KEY PUBLIC SECTOR WORKERS...
65% OF TOWNS UNAFFORDABLE FOR KEY PUBLIC SECTOR WORKERS

New research from Halifax shows that the average house is unaffordable for key workers in at least 65% of towns (339 out of 519) across Great Britain. Five years ago, the average house in only 126 (24%) of towns was unaffordable for all key worker groups surveyed.

--Affordability for key workers is worst in the South West where the average house in all 34 towns surveyed is unaffordable for all five key worker groups. In 2001, the average house was unaffordable in only five of the 34 towns in the region. (Tables 1 & 2)

--Greater London and the South East is the next most badly affected part of the country with 95% of the towns and boroughs surveyed (179 out of 189) unaffordable for all key worker groups - up from 59% (111 towns and boroughs) in 2001. (Table 1 & 2)

--The South West has seen the biggest increase in the number of towns where the average house is unaffordable for all key worker groups over the past five years - a rise of 85 percentage points from 15% in 2001 to 100% in 2006. There have also been substantial increases in East Midlands (up 61 percentage points), East Anglia (52 percentage points), Yorkshire & Humber (51 percentage points), West Midlands (50 percentage points) and North West (47 percentage points). (Tables 1 & 2)

--Gerrards Cross is the least affordable town in Great Britain for key workers followed by Weybridge. Lochgelly in Fife is the most affordable town in Great Britain for key workers. (Tables 3 & 4)

Martin Ellis, Chief Economist at Halifax, commented:

'Key workers have been hit hard by the strength of the property market over the past five years. Now it is difficult for key workers to buy the average house not only in the south of England but also in significant parts of the Midlands, northern England, Wales and Scotland.

While flats are affordable for key workers in many towns outside southern England, it is becoming increasingly difficult for key workers to purchase a flat in many major cities including Edinburgh, Oxford and Cambridge and two thirds of London's boroughs.

It is important that the government continues to develop schemes to help key workers onto the property ladder and to ensure that these schemes are not confined to southern England. The presence of sufficient key workers is critical to the smooth functioning of life in our cities and towns.'

KEY FINDINGS

By Region

--House price to earnings ratios for key workers are highest in London and the South East. In London, the average house price to earnings ratio for ambulance staff is 11.1 (i.e. the average house price is 11.1 times annual gross average earnings) and 9.5 for nurses. Fire services staff in the South East have a PE ratio of 8.5. (Table 7)

--Key workers have the lowest house price to earnings ratios in Scotland. The average house price to earnings ratio for a police officer in Scotland is 3.4, while for teachers the PE ratio is 3.7. (Table 7)

--Over the past five years, house price to earnings ratios have risen the most in the North, Wales, and South West. In all these regions the average PE ratio for key workers has increased by 2.7 times since March 2001. (Table 7)

--Affordability issues for key workers are least pressing in Scotland. Only 10% of towns are unaffordable for all key worker groups north of the border. However, 94% of towns in Scotland are unaffordable for ambulance staff and 79% of towns are unaffordable for nurses. (Table 1)

By Town

--Gerrards Cross is the least affordable town in Great Britain for key workers. The average price of a house in Gerrards Cross in the South East ranges from 17 times the average earnings of a Police Officer up to 30 times the average earnings for Ambulance Staff*. Weybridge and Kensington & Chelsea are the next most unaffordable places in Britain. The ten least affordable towns are all in the south of England as are eighteen of the top twenty. The other two towns in the twenty least affordable areas are Wilmslow in the North West and Ilkley in Yorkshire.

--Lochgelly is the most affordable town in Great Britain for key workers. The average price of a house in Lochgelly in Scotland ranges from 2.5 times the average earnings of a police officer to 3.8 times ambulance staff earnings. Seven out of the ten most affordable towns for key public sector workers are in Scotland, along with fifteen out of the top twenty. (Table 4)

Flats

--Flats are more affordable for key workers. Flats & maisonettes are affordable for all key worker groups in 75% of towns (292 out of 391) across Great Britain. However, the proportion has fallen over the past five years with flats affordable for key workers in 93% of towns in 2001. In 2006 flats were unaffordable for all key worker groups in nearly two thirds of London boroughs and the cities of Edinburgh, Oxford, Cambridge and Bath. (Tables 5 & 6)

--Flats are least affordable for key workers living in London. The average flat in at least 64% (21 out of 33) London boroughs is unaffordable for key workers. Additionally, the average flat is unaffordable for nurses and ambulance staff in all London boroughs. (Table 5)

--Flats & maisonettes are most affordable for key workers in Wales, East Midlands and the North. Teachers and police officers could afford the average flat in each of the six towns surveyed in Wales, all fourteen towns surveyed in East Midlands and all eighteen towns surveyed in the North. (Table 5)

*Ambulance staff excludes paramedics.

By Occupation

--Ambulance staff* are the key worker group with the most affordability problems. The average house in only four towns (1%) of the 519 surveyed across the UK is affordable for ambulance staff - three of these towns are in Scotland with one town in the North West (Table 1). The average house price to earnings ratio for ambulance staff across the UK is 8.1 and 11.1 in Greater London. (Table 7)

--Affordability has deteriorated most for nurses over the past fiveyears. In 2001, the average house in 43% of towns (225 out of 519) was unaffordable for the typical nurse. In 2006 97% of towns (503 out of 519) are unaffordable for a nurse. (Tables 1 & 2)

--72% of towns are unaffordable for teachers in 2006 compared with 33% of towns in 2001. (Tables 1 & 2)

*Ambulance staff excludes paramedics.

TABLE 1 - UNAFFORDABLE TOWNS FOR KEY WORKERS IN MARCH 2006 (ALL HOUSES)

March 2006All Key WorkersFire ServicesPolice OfficersTeachersNursesAmbulance StaffTotal No. of Towns surveyed

No.%No.%No.%No.%No.%No.%

North620%1963%723%620%2997%30100%30

Yorkshire & the Humber2351%3782%2351'60%4396%45100%45

North West2853%4789%2853%3260%5196%5298%53

East Midlands2361%3797%2361%2463%38100%38100%38

West Midlands2457%3993%2457%3071%42100%42100%42

East Anglia1368%19100%1368%1895%19100%19100%19

South West34100%34100%34100%34100%34100%34100%34

South East14894%157100%14894%15699%157100%157100%157

Greater London3197%32100%3197%32100%32100%32100%32

Wales419 95%419%419 95%21100%21

Scotland510%2450%510%1327%3879%4594%48

Great Britain33965%46590%34066%37672%50397%51599%519

TABLE 2 - UNAFFORDABLE TOWNS FOR KEY WORKERS IN MARCH 2001 (ALL HOUSES)

March 2001All Key WorkersFire ServicesPolice OfficersTeachersNursesAmbulance StaffTotal No. of Towns surveyed

No.%No.%No.%No.%No.%No.%

North00%00%00%00%00%nana30

Yorkshire & the Humber00%49%00%24%511%nana45

North West36%815%36%48%815%nana53

East Midlands00%nana00%13%411%nana38

West Midlands37%1433%37%921%1433%nana42

East Anglia316%1263%316%421%1053%nana19

South West515%2471%515%721%2265%nana34

South East8353%13284%8353%11372%13183%nana157

Greater London2888%3094%2888%2888%3094%nana32

Wales15%15%15%15%15%nana21

Scotland00%00%00%00%00%nana48

Great Britain12624%22543%12624%16933%22543%nana519

TABLE 3 - TEN LEAST AFFORDABLE TOWNS FOR KEY WORKERS

Town/ BoroughRegionPrice - Earnings Ratio March 2006

Fire ServicesPolice OfficersTeachersNursesAmbulance Staff*

Gerrards CrossSouth East 22.917.219.123.730.1

WeybridgeSouth East 21.115.917.521.827.6

Kensington And ChelseaGreater London19.415.018.022.722.7

AscotSouth East 17.813.414.818.423.4

SevenoaksSouth East 17.213.014.317.822.6

LeatherheadSouth East 16.712.613.917.221.9

WestminsterGreater London16.012.414.918.818.7

Walton On ThamesSouth East 16.312.213.516.821.3

GodalmingSouth East 15.811.913.116.320.7

HookSouth East 14.911.212.415.419.5

*Ambulance staff excludes paramedics.

TABLE 4 - TEN MOST AFFORDABLE TOWNS FOR KEY WORKERS

Town/ BoroughRegionPrice - Earnings Ratio March 2006

Fire ServicesPolice OfficersTeachersNursesAmbulance Staff

LochgellyScotland 3.22.52.73.53.8

KeltyScotland 3.32.62.83.63.9

NelsonNorth West 3.32.72.73.54.2

GreenockScotland 3.62.83.13.94.3

Ebbw ValeWales 3.92.82.93.84.5

ClydebankScotland 3.82.93.24.14.5

RenfrewScotland 3.83.03.24.14.5

MexboroughYorkshire & the Humber3.83.13.24.14.8

BellshillScotland 3.93.13.34.24.7

PeterheadScotland 4.03.13.44.34.7

TABLE 5 - UNAFFORDABLE TOWNS FOR KEY WORKERS IN MARCH 2006 (FLATS & MAISONETTES)

March 2006All Key WorkersFire ServicesPolice OfficersTeachersNursesAmbulance StaffTotal No. of Towns surveyed

No.%No.%No.%No.%No.%No.%

North00%16%00%00%633%1372%18

Yorkshire & the Humber29%732%29%418%1255%1777%22

North West310 65%310%516%2477%3097%31

East Midlands00%429%00%00%750%1286%14

West Midlands518%829%518%829%1864%2589%28

East Anglia114%686%114%114%457%686%7

South West623%2596%623%727%2285&100&

South East6040%13087%6040%8758%13389%150100%150

Greater London2164%3194%2164%3091%33100%33100%33

Wales00%350%00%00%350%583%6

Scotland12%35%12%12%59%916%56

Great Britain9925%23861%9925%14337&768%32683%391

TABLE 6 -UNAFFORDABLE TOWNS FOR KEY WORKERS IN MARCH 2001 (FLATS & MAISONETTES)

March 2001All Key WorkersFire ServicesPolice OfficersTeachersNursesAmbulance StaffTotal No. of Towns surveyed

No.%No.%No.%No.%No.%No.%

North00%00%00%00%00%nana18

Yorkshire & the Humber00%00%00%00%00%nana22

North West13%13%13%13%13%nana31

East Midlands00%00%00%00%00%nana14

West Midlands00%14%00%00%14%nana28

East Anglia00%00%00%00%00%nana7

South West00%28%00%00%14%nana26

South East85%4027%85%2315%3926%nana150

Greater London2061%2164%2164 61%2267%nana33

Wales00%00%00%00%00%nana6

Scotland00%12%00%00%12%nana56

Great Britain297%6617%308%4411%6517%nana391

TABLE 7 - AVERAGE HOUSE PRICE : EARNINGS RATIOS FOR KEY WORKERS IN MARCH 2001 - 2006

Fire ServicesPolice OfficersTeachersNursesAmbulance Staff

2001200620012006200120062001200620012006

North2.55.11.84.52.24.42.65.9na7.2

Yorkshire & the Humber2.55.11.94.12.14.42.55.5na6.6

North West2.85.62.14.52.34.62.85.8na7.0

East Midlandsna5.82.44.72.84.93.46.4na7.4

West Midlands3.56.12.74.93.15.33.77.0na8.3

East Anglia4.57.63.15.03.45.54.17.0na7.9

Wales2.96.42.34.62.64.63.16.1na7.3

South West4.98.13.55.83.95.94.67.6na10.7

South East6.28.54.56.45.37.06.28.7na11.1

Greater London6.28.15.96.35.67.66.69.5na9.5

Scotland2.84.32.13.42.43.72.94.7na5.1

Great Britain3.96.52.95.03.35.54.07.0na8.1

Editors' Notes

*AFFORDABILITY CALCULATION

To determine which towns are unaffordable for key public sector workers we have analysed the house price : earnings ratio for each key public sector worker occupation in each town against the UK average first time buyer (FTB) annual house price : earnings ratio in 2005 (4.46). Where the key public sector worker house price : earnings ratio exceeds the FTB ratio across all occupation types it has been classified as an unaffordable town.

FTB affordability is the chosen threshold for key worker housing analysis as the issue is about helping key public sector workers onto the housing ladder.

References to towns being unaffordable for key workers refers to the town being unaffordable for all key worker groups.

The house price:earnings ratio for key public sector worker occupations is calculated by dividing the average house price by annual average earnings for the relevant occupation. The earnings calculation for key public sector workers have been sourced from the ONS Annual Survey of Hours and Earnings which provides average salaries. So, very importantly, the numbers used in this release are not entry-level salaries, e.g. the ONS average salary for nurses is£24,759.

This affordability measure assumes a typical deposit (17% of purchase price in 2005). The likelihood is that a large proportion of key workers will fall into the category of not having enough funds to meet this analysis; therefore, it is likely that our affordability measure actually understates the degree to which properties are unaffordable for key workers. We have also assumed obtaining a mortgage depends solely on a single income.

DATA AND SOURCES

Earnings data used within this research has been taken from the Office of National Statistics Annual Survey of Hours and Earnings (table 15.7a) which compiles its findings based on earning levels in April each year. Latest data is for 2005.

The following average annual earnings (ONS Annual Survey of Hours and Earnings codes shown in brackets next to each occupation type) have been used in this analysis. It should be noted that this salary data will take into account varying lengths of service and salary grades so is not indicative of the true salary for a new-starter in each occupation.

--An average salary of£31,626 in 2006 for full-time teachers (SOC 2314/2315) in primary and secondary school roles.

--An average salary of£24,759 for full-time nurses (SOC 3211).

--An average salary of£34,913 for full-time police officers (SOC 3312) who hold the rank of sergeant or below.

--An average salary of£26,511 for full-time fire fighters (SOC 3313) at the rank of leading fire officer or below.

--An average salary of£21,384 for full-time ambulance staff (excluding paramedics) (SOC 6112).

KEY WORKER SCHEMES

Key Worker Scheme information is sourced from the Department for Communities and Local Government.

The Government operates the 'Key Worker Living' scheme and since April 2006 the 'Homebuy' scheme. These schemes aim to help an additional 20,000 households to buy their own home by 2010.

4,942 key worker units were provided through both the Homebuy and new build products in 2004/05 and 4,015 key workers were helped into a new home for the year.

KEY WORKER LIVING

Eligibility

This help is available in London, the South East and the East of England.

Key workers who may get help are:

--Clinical NHS staff (with the exception of doctors and dentists);

--Teachers and nursery nurses in schools and further education/sixth form colleges;

--Police officers, Community Support Officers and some civilian staff;

--Prison Service staff in certain prisons

--Probation Service staff;

--Social workers, nursery nurses, educational psychologists, and therpists (e.g. occupational therapists) employed by local authorities, CAFCASS or the NHS;

--Local Authority Planners and

--Firefighters and other uniformed staff below principal level in Fire and Rescue Services.

Availability

The main source of key worker funding to purchase a home is now provided through the Homebuy scheme. The Homebuy scheme has three arms -Open market Homebuy, New build Homebuy and Social Homebuy with Open market and New build being the relevant streams for key workers.

Additional to this key workers may also be able to take up 'Intermediate renting' where the rent is set at a level between that charged by social and private landlords and the accommodation is provided by a registered social landlord.

OPEN MARKET HOMEBUY

--Purchasers will be expected to raise finance to purchase around 75 per cent of a home on the open market. A housing provider will provide a loan of up to£50,000 for the balance required.

--The loan must be repaid when the purchaser sells their home or ceases to be a key worker. The amount to be repaid will be the same percentage (e.g. 25%) of the value of the home.

--This scheme is primarily for key workers but will be available on a more limited scale to social tenants and other priority first time buyers.

--From October 2006, three mortgage lenders, including HBOS, will joint fund equity loans through the Open Market HomeBuy option.

NEW BUILD HOMEBUY

--Purchasers will buy a minimum initial purchase of 25 per cent of a newly-built home. A housing provider will hold the remainder of the equity. The provider will be able to levy a charge of up to 3.0 per cent on their equity. A lower target average for the charge will be set at 2.75 per cent.

--Purchasers may buy further shares in their home when they can afford to do so - a process known as 'staircasing'. The purchase of further shares will be at market value.

--The First Time Buyers Initiative - using public sector land in an innovative way to provide affordable housing - will be a form of New Build HomeBuy.

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