Insight

Home ownership 'increasingly distant prospect' in Greater Manchester

Rising rents, increasing prices, sluggish wage growth and the cost of living crisis have made climbing the housing ladder harder. Credit: PA Images
  • Report by Granada Reports Apprentice Journalist Ajai Singh

Buying an average home in Greater Manchester has become increasingly difficult over the past decade, latest figures show. 

Experts have branded the current housing market as “dysfunctional” which has led to home ownership becoming an “increasingly distant prospect” for aspiring homeowners.

The Office for National Statistics (ONS) calculates house affordability through an affordability ratio. 

This is where the average house price in a particular area is divided by the average earnings of someone who works in that area. 

The bigger the number, the less affordable buying a house becomes.

In 2011, the affordability ratio in Stockport was 5.99. This means that average house buyers spent nearly six times their annual salary, before tax and other expenses, to purchase a house. 

However, by 2021, the ratio had nearly doubled to 10.01. This suggests that a house buyer had to typically spend over 10 times their annual salary to purchase a house in Stockport. 

This is similar to national trends. 

In England in 2021, full-time employees could typically expect to spend around 9.1 times their earnings on purchasing a home; this is an increase since 2020, when it was 7.9.

Jonathan Webb, a housing expert from think tank IPPR North suggests a combination of factors has led to the housing ladder being pulled further out of reach. 

A long term issue of how people buy houses has pushed prices up. Whilst credit checks have become much tighter since the financial crisis of 2008, the amount people can borrow has increased. 

Jonathan says whilst this has allowed people to get a standard mortgage four or five times their household income, this has led to house prices increasing - as buyers can get more. 

Secondly, since the 1980s, the supply of affordable housing has dwindled. When Right to Buy was introduced in 1980, there were more than six million council homes - by 2017, there were around two million council homes in the UK. 

Whilst Right to Buy provided people with a considerable level of security, the irony is that it made the pathway to home ownership more difficult.

Despite the government promising to build 300,000 extra homes a year, Jonathan says that the government has not met those targets. 

But the government is on a positive trajectory.

In 2018, 198,000 houses were built compared to 243,770 in 2019/20.

Thirdly, he says the current cost of living crisis and Covid are exacerbating difficulties in affording a house with “people on the lowest incomes facing the full force” of the crises. 

But house prices have defied these economic shocks with house prices in our region rising by almost 12% in 2021. 

Consequently, those who are homeowners have been better able to weather these storms while those on lower incomes and younger workers are further squeezed - making home ownership further out of reach. 

In Salford, the affordability ratio of a property has increased by 56% - from 4.33 in 2011 to 6.74 in 2021. 

Additionally, Trafford, which has an average house price of £350,000, has become an increasingly popular area for young professionals due to its relative affluence and close proximity to Manchester.

The affordability ratio has soared from 6.89 in 2011 to 10.3 in 2021 - a nearly 50% increase. 

But Jonathan doesn’t believe these surges have to be inevitable. 

In the short term, he argues that the government needs to provide further support to aspiring homeowners who are facing higher rents in addition to the crippling cocktail of other cost of living rises.

He adds that there will be a lot of households who will “have to make difficult decisions on whether they can put on the heating.”

In the long term, he argues that the link between wages and house prices needs to be re-established. 

He says that local councils should reserve portions of new housing developments for local people, according to age and wages - opening the pathway that Help to Buy did to home ownership - with government approval and funding to boost building. 

This in turn will stabilise house prices with incremental rather than surging increases. 

But the very process of approving planning developments also needs to be rebalanced - with aspiring homeowners needing to be part of discussions that are often dominated by people who are fearful that developments will dampen the price of their home.

Members of the public are allowed to attend local council planning meetings and can even ask to speak on particular developments that affect them - democratising access to decision making. 

Housing policy in the UK is incredibly complex. It’s easy to see why more than a third of people buying a house feel it is one of the most stressful events in life.

It’s all the more difficult when aspiring homeowners struggle to get a deposit together in the face of the worrying increases that Covid and the cost of living crisis has wrought. 

Deputy Mayor Paul Dennett, GMCA Lead for Housing, Homelessness and Infrastructure, said in statement: “It needs to be remembered that Stockport’s affordability ratio is not a million miles from the English average of 9.1 times the average salary, while eight of the 10 Greater Manchester districts have affordability ratios significantly below the national average. 

"What is clear, though, is that the country as a whole is facing a stark crisis of housing affordability and under-supply, creating huge pressure on the market and growing insecurity for far too many people.

"We have repeatedly made the case for Government to work with us to deliver increased investment in safe, decent, and truly affordable housing, and for developers and housing associations to step up and bring forward the homes that our residents need. 

"Even the Government’s definition of affordability itself needs clarity, as it often bears no relation to what people can actually afford.

"Greater Manchester has enjoyed huge economic and population growth in recent decades– but without safeguards, lack of affordability in housing can be one side effect of this success. 

"I have always argued that the only solution to our housing crisis is Council-house building, which is currently impossible to do at the scale required due to national government legislation and lack of funding.

"Despite these obstacles, the GMCA has set out our ambition to deliver at least 50,000 good-quality, genuinely affordable homes by 2037, including 30,000 net zero homes for social or affordable rent. 

"We are also supporting the development of new affordable housing through our Brownfield Housing Fund, regenerating sustainable brownfield sites and helping to meet the growing need for homes. These are some of the achievable steps that we’re taking here in our city-region, but they need to happen in tandem with urgent action at a national level.

"It will take legislative changes from Government to fundamentally solve our country’s housing crisis – but in the meantime, in Greater Manchester we are doing everything we can to mitigate the problem."