Housing Affordability Continues to Improve for Scotland's Key Workers

8/2/2019 Housing Affordability Continues to Improve for Scotland's Key Workers

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PRESS RELEASE

Bank of Scotland plc is registered in Scotland no. SC327000. Registered office: The Mound, Edinburgh EH1 1YZ.

Authorised and regulated by the Financial Services Authority.

The Bank of Scotland Key Worker Housing Review tracks housing affordability for five groups of public sectorworkers: nurses, teachers, police officers, fire fighters and paramedics in 51 post towns across Scotland. Housingaffordability is defined as the ratio of average house price to regional average earnings of key workers; where the ratio isbelow 4.0 housing is deemed affordable, above 4.0 is unaffordable (see Editors' Notes for details) The calculation is basedon a single income and is, therefore, conservative. The review is compiled using information from the Bank of Scotland'sown extensive housing statistics database and earnings data from the ONS for the period to March 2012.

NOT FOR BROADCAST OR PUBLICATION BEFORE 00:01 HRS MONDAY 16 TH APRIL 2012

HOUSING AFFORDABILITY CONTINUES TO IMPROVE FORSCOTLANDS KEY WORKERS

Latest research from Bank of Scotland shows housing affordability has improvedconsiderably for key public sector workers since house prices peaked in September2007. However, there is still some way to go before the levels of affordability seen in 2002are reached.

Seven out of ten towns (69%) in the survey are calculated to be affordable for the average keyworker, based on the ratio of average house prices to average earnings. This represents aconsiderable improvement since September 2007 when homes in just 16% of Scottish towns 8 towns in total - were affordable for key public sector workers.

Significant improvements in affordability across most of the countryAll five key worker occupations analysed - nurses, teachers, police officers, fire fighters andparamedics - have seen large improvements in affordability during the period. The mostconsiderable gains have been for firemen with an increase in affordable towns from 2% in 2007to 63% in 2012. Firemen are followed by nurses (2% to 59%) and teachers (18% to 76%). In2007, Wishaw in North Lanarkshire was the only affordable town for nurses across the UK.

Homes in Wales are the most affordable for key workers in the UKWales is the most affordable part of the UK for key workers with an average house price to keyworker earnings ratio of 3.6 in 2012. The North (3.7), Yorkshire and the Humber (3.8) and theNorth West (3.8), Scotland and East Midlands (4.0) follow closely behind. In 2007, no regionhad a house price to earnings ratio below 5.0. Unsurprisingly, Greater London (7.6) and theSouth East (6.6) are still the least affordable regions for key workers. [See Table 1]

Biggest improvement in affordability led by AlloaThe town showing the biggest improvement in affordability since the peak of the housing boomin September 2007 is Alloa. Key workers in the Clackmannanshire town have seen the houseprice to earnings ratio drop from 4.8 to 2.9 in 2012; others include Renfrew (4.5 to 2.6), Larbert(5.7 to 3.8) and Ayr (5.2 to 3.6). All these towns are now affordable for key workers.

The most affordable town in 2012 is. Bellshill The most affordable town for key workers is Bellshill with an average house price to key workersratio of 2.5. The North Lanarkshire town is followed by Renfrew (2.6), Cumnock, Lochgelly andCoatbridge (all 2.7). There are 35 towns with an average house price to key workers ratio belowthe Scotland average of 4.0 and therefore affordable for key workers. [See Table 2]

The least affordable areas for key workers are Inverurie (6.6), Stonehaven (6.3) and Edinburgh(5.9).

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Only modest progress in affordability in the past yearLittle change in either average house prices or earnings for key workers over the past yearresulted in only a modest improvement in affordability conditions over the past year. There wasan overall increase in the number of affordable towns of just one over the last year with 4becoming more affordable and 3 less affordable. Those towns that have become affordableover the past year include Fraserburgh, Ayr, Glasgow and Livingston. On the other hand,Dumfries, Bathgate and Helensburgh are those that have become less affordable in the past

year..and current levels of affordability are still low compared with a decade agoAlmost all (94%) of towns were affordable in 2002 compared with 69% in 2012. During thisperiod, nurses have fared the worst; in 2002 90% of towns were affordable to nurses comparedto 59% today. Fire fighters have seen the number of affordable towns drop by a third. Therehas been a 20% reduction for police officers and teachers.

Nitesh Patel, housing economist at Bank of Scotland, commented:"Housing affordability for key public sectors workers has improved significantly across Scotlandsince house prices peaked in 2007. Close to seven in ten towns are now affordable comparedwith just sixteen per cent in 2007. There are still considerable affordability issues for keyworkers in Aberdeenshire and Edinburgh.

"A combination of house price declines and growth in earnings has contributed to thisimprovement in affordability. However, house prices nationally have changed little in the pastyear, which together with pressure on public sector earnings, has resulted in only a modestimprovement in home affordability for key workers in the past 12 months.

Table 1: House Price to Earnings Ratio for Key Workers* by region

Region 2002 2007 2012

North 2.7 5.3 3.7Yorkshire and the Humber 2.8 5.3 3.8North West 3.2 5.7 3.8East Midlands 3.4 5.8 4.0West Midlands 3.8 6.0 4.2East Anglia 4.3 6.9 4.7Wales 3.0 5.5 3.6South West 4.9 7.5 5.6South East 6.4 9.1 6.6Greater London 7.5 10.2 7.6Scotland 3.0 5.3 4.0UK 4.4 7.1 4.9

Sources: Bank of Scotland and ONS*Average of the five key worker occupations analysed; this is based on the weighted average earnings fornurses, teachers, police officers, fire fighters and paramedics

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Table 2: 10 Most Affordable Towns for Key Workers House Price to Earnings Ratios*

2002 2007 2012

Fraserburgh 1.6 Wishaw 3.5 Bellshill 2.5Irvine 1.8 Bellshill 3.6 Renfrew 2.6Lochgelly 1.8 Cumnock 3.6 Cumnock 2.7Arbroath 1.9 Lochgelly 3.7 Lochgelly 2.7Wishaw 2.1 Clydebank 3.7 Coatbridge 2.7Glenrothes 2.1 Airdrie 3.9 Irvine 2.8Greenock 2.1 Dumbarton 3.9 Airdrie 2.8Peterhead 2.1 Alexandria 3.9 Wishaw 2.9Kilmarnock 2.1 Larkhall 4.1 Alloa 2.9Bellshill 2.1 Paisley 4.1 Clydebank 2.9Sources: Bank of Scotland and ONS* Average of the five key worker occupations analysed; this is based on the weighted average earnings fornurses, teachers, police officers, fire fighters and paramedics

EDITORS' NOTES:*AFFORDABILITY CALCULATION

To determine which towns are affordable for key public sector workers we have analysed the house priceto earnings ratio for each key public sector worker occupation in each town against the UK historicalaverage house price to gross annual earnings ratio of 4.0. Where key public sector worker price toearnings ratio is below 4.0 the town is classified as affordable; above 4.0 is unaffordable. The multiple of4.0 is approximately equivalent to an average loan to income multiple of 3.25 plus a 19% deposit, or a 3.5times multiple and a 12.5% deposit. This calculation is based on a single income and thereforeconservative.

The house price to earnings ratio for key public sector worker occupations is calculated bydividing the average house price in each post town by the gross regional annual average earningsfor the relevant occupation. The earnings calculation for key public sector workers has been sourcedfrom the ONS Annual Survey of Hours and Earnings (ASHE) which provides average salaries. Veryimportantly, the numbers used in this release are not entry-level salaries, e.g. the ONS averagesalary for a nurse is 30,741 1.

Note 1 this is based on the UK average salary for nurses (SOC 3211) from the April 2011 ASHE releaseuplifted by the change in weekly average earnings (KA17) with Bank of Scotland estimate to March 2012.

DATA SOURCES:

This research is based on data from Bank of Scotland's own extensive housing statistics database andONS data on average earnings.

House PricesHouse prices are at post town level, the prices used are simple arithmetic ('crude') averages. Theseprices are not standardised and therefore can be affected by changes in the sample from period to period

Average Earnings

Earnings data for key public sector occupation is from the ASHE April 2011 release and uplifted by thechange in weekly average earnings (KA17) with Bank of Scotland estimate to March 2012.

The following average annual earnings (ONS Annual Survey of Hours and Earnings codes shown inbrackets next to each occupation type) have been used in this analysis. It should be noted that thissalary data will take into account varying lengths of service and salary grades so is not indicative of thesalary for a new-starter.

In this review the key workers occupation types are based on the Standard OccupationalClassification (SOC) codes as provided in ASHE April 2011. These are:

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Full-time teachers (SOC 2314/2315) in primary and secondary school roles. Full-time nurses (SOC 3211). Full-time police officers (SOC 3312) who hold the rank of sergeant or below. Full-time fire fighters (SOC 3313) at the rank of leading fire officer or below. Full-time paramedics (SOC 3213).

There are a number of affordable home ownership schemes offered by the Scottish Government. For

further information please follow the link:

http://www.scotland.gov.uk/Topics/Built-Environment/Housing/BuyingSelling/lift

For further information, contact:Zoe Redhead, Bank of Scotland Press OfficeTel: 0131 655 5405

Email: [email protected]: www.lloydsbankinggroup.com/media.asp
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Housing Affordability Continues to Improve for Scotland's Key Workers