Public Servant Lifestyle

More than half of UK locations 'unaffordable' for home-buying key public service workers.

New research shows that buying a home is out of reach for the average key public sector worker - nurses, teachers and police officers - in more than half of the UK's major postal towns.

Housing affordability problems for key public sector workers have largely been confined to London and the south east of England in previous years.

The average house price in 504 (80%) of the 634 UK towns analysed is now in excess of £100,000. This has had a serious impact on key public sector workers. Of the towns analysed, 496 (78%) are unaffordable for nurses. Police officers cannot afford to buy a house in 400 (63%) of the 634 towns, whilst 390 (62%) are now unaffordable for teachers.

Key Workers

“Buying a home is out of reach for an increasing number of key workers across the country," says Shane O'Riordain, general manager, Group Economics for the Halifax company, which conducted the survey. "Our research shows the average UK house price is now almost six times the average UK salary for both nurses and firefighters.

"In regions where affordability is an issue, the recruitment and retention of key public sector workers will become more and more of a problem. The current scheme, whilst available throughout the country, is weighted towards London and the South East. Clearly it is sensible for the government to continue with the London weighting but consideration should be given to extending the scope of the scheme outside the south of England."

Key Findings

In London, the average price of a property now stands at 8.8 times a nurse's average annual pay, compared with 8.21 times in 2002. For fire fighters, the ratio has risen from 8.03 to 8.77, whilst the house price to earnings ratio has increased from 6.79 to 7.06 for teachers. Police officers have seen an increase in the ratio of prices to earnings, from 6.07 in 2002, to 6.33 in 2003, but, following the trend nationally, are still in a significantly better position than nurses, teachers and fire fighters. However, housing is rapidly becoming less affordable for police officers.

In 2003, the average house price to earnings ratio for key public sector workers was above the average 4.27 for a first time buyer in six regions from the English midlands southwards. The situation replicates the pattern last year when the same six regions were out of reach for key public sector workers. Key public sector workers in the English east and west midlands, East Anglia, Greater London, south east and the south west are now finding it increasingly difficult to buy their own home. This drive northwards will continues as the old north/south divide narrows.

Four regions - Wales, the north of England, the English north west and Yorkshire & the Humber - have seen the highest increases in house price to earnings ratios, but remain the most affordable for key public sector workers. The north experienced the highest rises and nurses in the region have the highest house price to earnings ratio of 4.41 (in 2002 it was 3.41). Police officers have to find 3.54 times their salary (compared to 2.84 in 2002) and teachers 3.38 (2.65).

Scotland is the most affordable area for all four key public sector occupations. Nurses have the highest house price to earnings ratio amongst key public sector workers in Scotland (3.65), followed by teachers (2.87) and police officers (2.73).

Nationally, the current situation is worst for nurses and fire fighters, with the average house price now being almost six times the average salary for both occupations. By comparison police officers have an average house price to earnings ratio of 4.44. The average house purchased by teachers cost £139,716 is 4.61 times the average annual salary (£30,274) for the occupation.

There are already schemes targeted at helping key public sector workers to get onto the property ladder. The Government's £250 million Starter Home Initiative assists health workers, teachers, police officers and fire fighters along with some other key worker occupations to buy a home in areas where high house prices are undermining staff recruitment and retention.

The scheme, which will close at the end of March 2004, has so far helped 6,000 key workers buy their own home. A new scheme is expected to be launched in April.

Key public sector workers can also take advantage of one of the shared ownership schemes offered by local housing associations. The schemes enable the home-buyer to purchase a property in stages (usually split blocks equal to 25% of the property value). The outstanding value of the property not purchased by the home-buyer is rented from the housing association.

Unaffordable Towns 2003

Total number of towns: 634 (North of England 45; Yorkshire & Humber 56; North west of England 62; English east midlands 46; English west midlands 48; East Anglia 22; South west of England 45; South east of England 158; Greater London 53; Wales 34; Scotland 49; Northern Ireland 16).

Professional 'Blackspot' Areas:

North of England: Nurses 42% / Teachers 18% / Police officers 18% / Firefighters *;

Yorkshire & Humber: Nurses 68% / Teachers 34% / Police officers 43% / Firefighters *;

North west of England: Nurses 63% / Teachers 39% / Police officers 40% / Firefighters 65%;

English east midlands: Nurses 96% / Teachers 59% / Police officers 74% / Firefighters *;

English west midlands 48; Nurses 68% / Teachers 34% / Police officers 43% / Firefighters *;

East Anglia: Nurses 100% / Teachers 86% / Police officers 82% / Firefighters *;

South west of England: Nurses 100% / Teachers 98% / Police officers 96% / Firefighters *;

South east of England: Nurses 100% / Teachers 99% / Police officers 99% / Firefighters 100*;

Greater London: Nurses 100% / Teachers 98% / Police officers 94% / Firefighters 100%;

Wales: Nurses 53% / Teachers 21% / Police officers 32% / Firefighters *;

Scotland: Nurses 35% / Teachers 10% / Police officers 4% / Firefighters *;

Northern Ireland: Nurses * / Teachers * / Police officers * / Firefighters *.

* Insufficient Sample

House Prices By Region

(Fourth Quarter 2002 / Q4 Fourth Quarter 2003/ Percentage Change)

North of England: 77,348 / 103,314 / 33.7

Yorkshire & the Humber: 78,459 / 97,688 / 24.7

North west of England: 83,604/ 100,534 / 20.4

English east midlands: 111,506 / 125,546 / 12.7

English west midlands: 117,938 135,984 15.5

East Anglia: 126,508 / 144,910/ 14.6

South west of England: 151,093 / 160,899 / 6.7

South east of England: 188,469 / 199,328 / 5.8

Greater London: 213,957 / 232,421 / 8.6

Wales: 87,277 / 114,870 / 31.8

Scotland: 71,788 / 84,086 /17.1

UK: 121,137 / 139,716 /15.4

(Source: Halifax - All House, All Buyers, Standardised Average Price, Seasonally Adjusted)

House Price : Earnings Ratios For Key Workers
(2002 / 2003 )

Great Britain

Nurses: 5.14 / 5.82; Teachers: 4.15 / 4.61; Police officers: 4.06 / 4.44; Firefighters: 5.13 / 5.93

Greater London

Nurses: 8.21 / 8.80; Teachers: 6.79 / 7.06; Police officers: 6.07 / 6.33; Firefighters:8.03 / 8.77

South east of England

Nurses: 7.83 / 8.18; Teachers: 6.56 / 6.63; Police officers: 6.48 / 6.65; Firefighters: 8.24 / 8.92

North of England

Nurses: 3.41 / 4.41; Teachers: 2.65 / 3.38; Police officers: 2.84 / 3.54; Firefighters: * / *

Yorkshire & the Humber

Nurses: 3.39 / 4.08; Teachers: 2.73 / 3.28; Police officers: 2.74 / 3.42; Firefighters: * / *

North west of England

Nurses: 3.58 / 4.34; Teachers: 2.82 / 3.32; Police officers: 2.88 / 3.45; Firefighters: 3.51 / 4.37

English east midlands

Nurses: 4.93 / 5.47; Teachers: 3.91 / 4.13; Police officers: 4.08 / 4.60; Firefighters:* / *

English west midlands

Nurses: 5.13 / 5.71; Teachers: 4.08 / 4.52; Police officers: 4.07 / 4.44; Firefighters: * / *

East Anglia

Nurses: 5.37 / 6.39; Teachers: 4.41 / 5.01; Police officers: 4.15 / 4.69; Firefighters: * / *

South west of England

Nurses: 6.53 / 6.42; Teachers: 5.21 / 5.40; Police officers: 5.16 / 5.02; Firefighters: * /*

Wales

Nurses: 3.79 / 4.71; Teachers: 3.02 / 3.71; Police officers: 3.23 / 3.97; Firefighters: * / *

Scotland

Nurses: 3.15 / 3.65; Teachers: 2.50 / 2.87; Police officers: 2.59 / 2.73; Firefighters: 3.03 / *

* Insufficient Sample

To determine which towns are unaffordable for key public sector workers, the Halifax analysed the house price:earnings ratio for each key public sector worker occupation against the UK average first time buyer (FTB) annual house price:earnings ratio in 2002 (3.64) and 2003 (4.27).

Where the key public sector worker house price:earnings ratio exceeds the FTB ratio across all occupation types it has been classified as an unaffordable region. FTB affordability is the chosen threshold as the issue is about helping key public sector workers get onto the housing ladder. We have also assumed that raising a mortgage depends on a solely on a single income.

The house price:earnings ratio for key public sector worker occupations is calculated by dividing the standardised average house price (seasonally adjusted) by annual average earnings for the relevant occupation. The earnings calculation for key public sector workers have been sourced from the Office of National Statistics (ONS) New Earnings Survey report, which provides average salaries. So, very importantly, the numbers used are not entry-level salaries, eg; the ONS average salary for teachers is £30,274.

Earnings data used within this research has been taken from the ONS New Earnings Survey which compiles its findings based on earning levels in April each year.

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

An average salary of £30,274 for full-time teachers (SOC 2314/2315) in primary and secondary school roles.

An average salary of £24,000 for nurses (SOC 3211).

An average salary of £31,450 for police officers (SOC 3312) who hold the rank of sergeant or below.

An average salary of £23,546 for firefighters (SOC 3313) at the rank of leading fire officer or below.

More information available in Work Life Balance, Moving Home