The average household now spends 47% of the average salary on housing, compared with 28% in 2020, according to the latest findings from interactive investor.
As of June 2023, the average household spent 66% of the average income on housing, food and energy, compared with a more modest 45% in 2020.
However, costs were higher in the 1970s and 1980s, with housing, food and energy costing 83% of an average income in 1970, 98% in 1980 and 92% in 1990.
Alice Guy, head of pensions and savings at interactive investor, said: “Household costs are at their highest level in three decades, and it’s hitting the younger generation hard.
“Waiting longer to buy their first homes, then grappling with super-sized mortgages, many households are now struggling to raise families on a shoe-string budget.
“The big three costs, housing, food and energy are at their highest level since the early 1990s, sucking up an enormous 66% of an average income, leaving only 34% ‘spare’ for other costs including their tax bill.”
She added: “This month, housing costs became more expensive than at any time since the early 1990s, and it doesn’t look like they’re coming down any time soon.
“This month, mortgage rates soared to 6.5%, leaving the average homeowner owing £1,323 each month.
“That’s a more than 100% increase compared with an average mortgage taken out in 2020, when mortgage interest rates stood at a historic low (based on a 75% mortgage on the average house price in 2020 and 2023).
“With house prices at a historic high compared to wages and economists predicting a sluggish economy for the next few years, it’s a reasonable bet that housing costs could be high for the foreseeable future.
“And with more of us renting rather than buying, many households may never see their household costs reduce significantly, even into retirement.”
