Household incomes have finally topped the levels they were at just after the financial crash. The average household in Britain now earns £24,300 a year, above the last peak in 2009. The picture looks rosy, with rising employment and low inflation helping income growth rise. But is there more to it than meets the eye?
It certainly seems that way if you live in London. Although those in the capital have enjoyed a healthy rise of nearly three per cent in their household incomes since the downturn, when you factor in housing costs, most Londoners are actually still losing out, according to the figures put out today by the Resolution Foundation. Because London has the lowest level of homeownership in the country, many of those in the capital are missing out on benefiting from factors which would help their earnings go further, such as falling mortgage costs. That means that, whilst on paper London has enjoyed the second largest rise in household income growth (behind Scotland), when the costs of housing are factored in, it’s a different story: London goes from being a success story to one of the losers over the last couple of years. The reason for that is that whilst in the rest of the country, between 60 and 69 per cent of households own their own home, in London, just under one in two people do.
This assessment makes for interesting reading, in that although Londoners usually benefit from a higher starting income than elsewhere – and also face a slightly less marked financial squeeze than other parts of Britain – it isn’t all good news for those in the capital. In fact, once housing costs are considered, you’re better off living in Wales, the East Midlands or the North West – which have all enjoyed a rise of more than four per cent in their household income growth over the last few years.
Comments