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Property: My house earns more than me

The value of Richard Black's property increased by £266,000 a year. Photo: Richard Black
The value of Richard Black's property increased by £266,000 a year. Photo: Richard Black (Richard Black)

Is your house increasing in value by more than you earn annually?

In the last year the Halifax price index found that house prices were going up by an average 11% — or £28,113.

In contrast, the median UK salary in 2021 was £25,971, according to the Office of National Statistics. This suggests that many people’s homes have actually "earned" more than they did in the last 12 months.

Broadcaster and businessman Richard Black lives in a three-bedroom house that he built himself in South Norfolk.

He moved in June 2020, and it was valued at £800,000 for mortgage purposes but, 18 months later, in December 2021, he had someone turn up on his doorstep and offer him £1.2m to sell it. Nor was it the only offer he had — he turned them all down.

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This was an increase of £400,000 or £266,000 a year. Richard currently earns £70,000 per annum in dividends, rental income and as a director of several companies.

His home’s increased equity means that Richard can take advantage of more competitive mortgage rates. "[The house’s increased price] has helped hugely. We have a much smaller, cheaper mortgage as the loan-to-value is much smaller," he said.

"We’re paying off the remainder of the mortgage at a much faster rate, because the rate was much cheaper."

Richard's house. Photo: Richard Black
Richard Black's house was valued at £800,000 for mortgage purposes but 18 months later he was offered £1.2m for it. Photo: Richard Black (Richard Black)

As well as the house’s increase in value, Richard gets a Renewable Heat Incentive from his home’s air source heat pump, and he uses this to pay down his mortgage further.

Richard says that this hasn’t changed his plans, "just brought them to reality much quicker". These include buying a holiday home — a dream that is possible because of his current house.

"We’re saving up to buy a property abroad so that would be the only reason to borrow more against this house, to avoid us getting a mortgage on the purchase overseas."

Ian Murton had a similar experience. He currently works three days a week as a PE coach, with an annual income of £15,000, and two days a week as a hypnotherapist for his business, Ian Murton Hypnotherapy, for which he earns £12,000 per annum.

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He expects this to increase as the business only launched eight months ago, but his current total income is £27,000 a year.

In 2012, he bought a four-bedroom detached house in Hitchin, Hertfordshire for £335,000. Apart from a small extension six years ago to turn his son’s single bedroom into a double, he’s not done any work on the property, and it has recently been valued at £625,000, equal to a £29,000 increase every year he’s owned it, or £2,000 more than what he earns working full time.

"I'd heard that on average house prices double roughly every 10 years, having said that I wasn't sure whether or not this was actually factually correct," said Ian. Despite the incredible increase, Ian says he doesn’t plan to sell or release any equity.

Ian's house. Photo: Ian Murton
In 2012, Ian Murton bought this four-bedroom detached house in Hitchin, Hertfordshire for £335,000 which has recently been valued at £625,000. Photo: Ian Murton (Ian Murton)

While this period of properties potentially earning more than the people who live in them is unusual, it’s not unheard of.

"Over the past 20 years of estate agency, I have seen this happen three times so this is not unique," said Jack Reid, director of Estate Agents and Property Investment Consultants, Orlando Reid.

"It is simply a matter of supply and demand. Less people are moving as house prices become increasingly unaffordable."

Sadly, those most affected by this steep house price increase are the people who aren’t yet on the housing ladder — first time buyers, who must find larger deposits and mortgages. Reid believes the only way to rebalance the situation is to increase the minimum wage further and ensure building targets are met: "This way the supply will be able to cater for the demand."

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It's impossible to know whether the current "hot" housing market will continue but most experts, including Halifax, believe that house prices will slow down this year, increasing by between 0-2%.

"This is the most asked question I have received in my time as an estate agent and prices over the past 20 years have kept rising," said Reid.

"There will always be some dips but while demand outstrips supply, prices will continue to increase."

Watch: How much money do I need to buy a house?