In a recent study by Capital Economics they found that mortgage affordability is in-line with other countries. It's analysis spanned over nine major western economies, Australia, Denmark, France, Ireland, Netherlands, Spain, Sweden, the USA and the UK.
The average family with a repayment mortgage in these countries over the past 40 years has spent 48% of its take-home pay on their mortgage.
Comparing these figures internationally the study has shown that the average mortgage costs in the UK have been 50% of our take-home pay over the last 40 years. Spain is still the most affordable at 39% and Sweden is the most expensive at 56%
Paul Diggle, economist and author of the report says one might expect the high population density and apparent structural undersupply of housing in the UK to mean that people in the UK have spent a higher proportion of their earnings on mortgages, but its research contradicts this.
He says: “Our analysis shows that over the past 40 years, long-run average UK mortgage affordability is unremarkable in an international context. To our minds, this casts doubt on the popular view that a chronic undersupply of homes in the UK supports high prices.”
Out of the nine countries researched, between 1970-2010 Sweden was the most expensive in terms of affordability, followed by the Netherlands, France, Denmark, the UK, USA, Australia, Ireland and Spain.
Mortgage affordability in the UK is currently at only 44% of take-home pay, compared with the Netherlands at 64% and the USA at 25%.
The research found that mortgage interest rates are the primary driver of a country’s level of mortgage affordability. Although one factor not taken into consideration in this study is the difference in affordability measures over the past 40 years in the level of house prices in relation to earnings.
No comments:
Post a Comment