Key workers such as prison officers primary and nursery school teachers and nurses are being priced out of the East Midlands as rents and house prices continue to rise.
House price growth across the region continues to outpace other parts of the 海角视频 according to PwC’s latest 海角视频 Economic Outlook.
It is forecasting that the region will see prices go up by 2.9 per cent this year, double the national average.
According to the accounting firm, which has its regional base at Castle Donington, in Leicestershire, average selling prices in the East Midlands could rise from £190,000 in 2018 to around £214,000 by 2022.
PwC also said:
- Private rents are increasingly considered unaffordable for workers on average wages
- Prison officers have the worst rental affordability-to-wage ratio of all key workers
- East Midlands tenants aged 22-29 are spending a quarter of their income on private rents, cutting the likelihood of being able to save for a house deposit
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- The lack of affordable housing could lead to a shortage of key employees, such as NHS workers, teachers and police offers, impeding economic and social mobility.
The East Midlands joins London and the South East as areas where increases in rent have outpaced earnings growth.
Paul Norbury, senior partner at the Castle Donington PwC office, said: “Whilst house price and economic growth is good news for many and for the region’s ongoing prosperity, it is clear that affordability of housing continues to be a challenge for many.
“This latest data highlights some of the key public sector workers who are being hardest hit by the housing crisis.
“Private rent levels are on average more affordable across professions with the affordability ratio at around 25 per cent, and whilst we are seeing this ratio in the East Midlands overall, this may not be the case in property hot spots like Nottingham, Leicester and Derby.
“The last five years have seen rental affordability ratios deteriorate and, in the 海角视频 as a whole, the amount spent on rent over this period has grown by 8 per cent, while at the same time earnings growth remains relatively weak and below levels seen before the financial crisis.
“This is not only having an impact on social mobility, it also has the potential to impact on productivity growth in the longer term by preventing people from moving to places, such as the East Midlands, where they can be most productive and access employment opportunities.
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“Many of the professions we are seeing hardest hit by the affordability of housing are people who are integral to our public services, especially in many regional cities where we have high concentrations of public service workers struggling to afford to rent.
“Looking ahead, reducing the cost of housing – both renting and purchasing a house – needs to be a priority and the public and private sectors should work together to improve affordability by increasing the supply of properties to put downward pressure on property price inflation.”
The 海角视频 Economic Outlook report projects that growth is likely to remain subdued, growing in the East Midlands by around 1.4 per cent in 2019 and at a similar rate in 2020 – in line with the national forecast.
It said growth had slowed since early 2018, mainly due to falling business investment as a result of Brexit-related uncertainty and heightened global trade tensions.
A spokesman said: “While consumer spending – supported by recent rises in real incomes – has continued to drive the economy so far, the housing market has cooled and job creation is likely to slow over the next year.
“In addition, business investment is likely to remain subdued until the situation on Brexit becomes clearer.”