Sir Howard Davies, the chair of NatWest Bank, raised eyebrows during a Radio 4 programme when he claimed that it is “not difficult to buy a house at the moment.”
When pressed about his comments, Sir Davies, who receives an annual salary of £764,000, explained this his perspective stems from lessons learnt during the 2008 financial crisis. He downplayed the difficulties of property ownership today, stating that the current situation is not as challenging as it may seem, and highlighted the dangers associated with very easy access to mortgage credit and over-borrowing.
His comments come at a time when recent research indicates a decline in home ownership in Britain from 71% to 65% between 2004 and 2021 due to soaring house prices.
What’s more, the latest Halifax house price index reveals that the current cost of a house in the UK is £287,105, an increase of nearly £5,000 compared to the previous year. What’s more, while average earnings doubled between 2007 and 2022, average house prices increased by four and a half times according to figures from the Office for National Statistics.
In 2012, it took an average earner 6.8 years to save for a deposit in England, but by 2023, this has increased to 9.6 years. During this period, the average price of a first home rose by 72%, while rents increased by 29%,
Campaign groups expressed astonishment at the comments, highlighting the ongoing cost-of-renting crisis making it challenging for people to transition from renting to homeownership, especially as a significant portion of monthly wages goes to landlords. Ben Twomey, the CEO of Generation Rent, questioned Sir Davies’ perspective and pointed out that despite increases in interest rates, house prices have not corrected, necessitating substantial savings for a significant deposit.
Nigel Farage, who has had his own disputes with NatWest in the past, criticised Sir Howard’s comments, stating that it is nearly impossible for young people to get on the property ladder. Other critics echoed concerns about the high income required for monthly mortgage repayments and the struggle to save for hefty deposits.
In response to the reaction, Sir Howard issued a statement “clarifying” his comments. He acknowledged that access to mortgages may be less difficult than in the past, particularly with recent rate movements by lenders. However, he also recognised the serious challenges faced by individuals buying a home and insisted that his intention was not to downplay these difficulties.