Home owners in income trap

Oct 8 2007 by Adrian Pearson, The Journal

HOUSE prices have rocketed and disposable income has dropped – the depressing results of two North-East reports.

While one report said families in Newcastle and Sunderland are among the cities most likely to spend up to 60% of earnings on essential bills, another brought bad news to home buyers.

The cost of buying a first home in the North-East has risen by more than £30,000 in just three years.

A report by research group NERIP found affordable housing in short supply.

The average cost of a first home at 2006 prices was £106,930 – up from £75,693 in 2003.

Tynedale was revealed as the most expensive district, with average house prices of £181,000. Hexham MP Peter Atkinson said regional planning policy had pushed up rural house prices. He said: “When it comes to affordable housing there are no easy answers, but clearly it is wrong to have a situation where we are forced to accept the housing figures set out in the regional spatial strategy.

“They have limited what we can build in Northumberland which has made what little housing there is a lot more expensive.”

Development agency One NorthEast is set to take on even more responsibility for the region’s growth in 2010.

Tom Warburton, head of infrastructure and environment, said they were aware of the problems faced by would-be homeowners.

He said: “The regional housing issues aren’t just about the supply of homes to buy or rent, but about the quality and type of homes being built and it’s important that the region develops housing stock suitable to meet the demands of the 21st Century workforce.” As house prices continue to rise, a report by energy advice company uSwitch.com has revealed the cost of living in the North-East has put the region among the worst in the UK.

Newcastle sees 57% of household income spent on paying bills – and the figure increases to 60% in Sunderland.

None of the UK’s top 10 towns for disposable income were in the North-East.

And after taxes and bills, the average household in Newcastle is now left with just £11,1421 – 31% less than the national average of £16,262. In the last 10 years, according to uSwitch.com, people in the North-East have seen a 2% drop in the amount of money they have spare after day-to-day expenses.

The internet company blamed the drop on the nationwide rise in the cost of utility bills and an increase in personal debt.