* The average home in London now costs 6.75 times a teacher’s annual salary. Ten years ago, it was four times salary

* But in the north-west, the average property costs about 2.7 times a teacher’s salary

* In almost three out of four areas with teacher shortages, a salary of more than pound;30,000 is needed to buy an average-priced house

* House building is at its lowest level since 1924

* Only 10 per cent of people owned their own home 100 years ago. Today, it’s around 70 per cent

Teachers, on an average salary of pound;26,400, would be hard-pressed to find a home they could afford in London. And with the average cost of a house set to triple nationally to pound;300,000 by 2020, and reach almost pound;600,000 in the capital, the problem is set to worsen. Despite initiatives to help key workers such as teachers, many are faced with some stark options: rent privately at huge cost, share housing, commute long distances to work, or move to a more lucrative profession.

It’s a problem that concerns the Government. An all-party select committee on housing, chaired by the Deputy Prime Minister John Prescott, is due to meet before the end of the year to draw up solutions, especially for London. Mr Prescott has promised to come up with ideas to encourage developers to refurbish 100,000 empty or derelict homes in the capital.

Is the problem getting worse?

Yes. Research this year by the Halifax shows that a home in London costs on average 6.75 times a teacher’s annual salary - up from four times 10 years ago. The bank claims that to restore the relationship between prices and pay that existed then, teachers in southern England would need an annual pay hike of between pound;9,800 and pound;18,750. Startlingly, the average London house “earns” more money each day than the average teacher.

Is it just in London?

The capital is the worst affected. But the situation is similar throughout the south-east, with house prices averaging 6.48 times a teacher’s salary. Other black spots include the south-west (5.29 times higher) and East Anglia (4.62).

But the situation is brighter in the north, Yorkshire and the Humber, north-west England and Scotland. In the north-west, the average property now costs about 2.68 times a teacher’s salary, down from 3.06 times in 1992; in Scotland, it is down from 3.07 to 2.48 times higher. Regional differences mean a teacher in London would need to earn 85 per cent more than a regional colleague for property in the capital to be as affordable as elsewhere. In other words, the pound;3,000 London weighting is hopelessly inadequate.

Why aren’t teachers heading north?

They are. Headteachers in London say high property prices are a major factor in the recruitment crisis. Statistics bear this out. In almost three out of four areas with a teacher shortage, a salary of more than pound;30,000 is needed to afford an average-priced house, while in 60 per cent of areas without any shortage, the average teaching salary of around pound;26,000 is enough to get a foot on the housing ladder.

Local education authorities in the north are catching on that they can offer new graduates something London can’t. A recent recruitment campaign in Hull pointed out that teachers can buy a luxury apartment in a dockside conversion for around pound;50,000. Similar developments in London are populated by barristers and professional footballers.

A survey by Keep London Working, a state-funded voluntary group of inner-London boroughs, employers’ groups, developers and housing providers, found that 32 per cent of 160 teachers in six schools were looking for another job. Of those, half - most of them secondary teachers - said they wanted a teaching job outside London, 62 per cent of them citing the need for cheaper housing as the reason.

So where do London teachers live?

Wherever they can afford to. The NUT says many teachers travel for several hours a day because the only accommodation they can afford is far from their schools. “It’s an added strain,” says a union spokesperson. “In the long run, it will affect performance levels.” A salary of pound;25,000 puts a mortgage of about pound;90,000 within reach - enough to buy a one-bedroom ex-council flat near Heathrow. Colleagues sometimes get a shared mortgage, simply because it’s cheaper than renting.

However, last week a London property company offered rent-free accommodation to teachers willing to live in empty office blocks and other disused buildings if they are prepared to keep out squatters.

Young teachers face the biggest difficulties, and renting a room is often the only option. The Teacher Support Network says most housing-related calls to its helpline come from newly qualified staff already struggling with student loans. But it also reports an increasing number of teachers facing problems as they try to trade up the property ladder.

What help is available?

Teachers usually earn too much to qualify for low-income social housing, but some housing associations in high-cost areas extend their schemes to include “intermediate” earners, such as young teachers. And the Government recently announced a pound;220 million Challenge Fund to build new homes in the south-east for renting to key workers at below-market rates - from around pound;100 a week for a two-bedroom house. Then there is the recruitment and retention funding, which allows individual schools to pay what are effectively housing subsidies - although the sums are small.

The Bexley Business Academy - a new school in south-east London - is going one step further. It plans to build 30 houses on-site or on surrounding land, to be rented out to staff at “no more than the cost of mortgage interest”.

But the scheme that has had most impact is the Starter Home Initiative (SHI), launched by the Government last year with a kitty of pound;250 million. The scheme has already housed 1,000 teachers, nurses and police officers, and aims to house another 9,000 over the next few years, mainly in London and the south-east.

How does SHI work?

In three ways. The shared-ownership scheme is a part-rent, part-own scheme in which an affordable share (between 25 and 75 per cent) of the value is bought by the key worker, who pays rent on the share owned by the SHI unit. Further shares can be bought over time until the house is owned outright.

The home-buy scheme is for those who can afford at least 75 per cent of the cost of the house. They can apply for a loan to cover the remainder, which is repaid when the house is sold. The applicant pays no interest, but if the value of the house goes up, so does the amount to be paid back.

Finally, the equity loan scheme is for those who can almost afford their own home, but need a leg-up. They get an interest-free pound;10,000 loan.

The strength of the initiative is that the buyer has freedom of choice. Once you’ve agreed a budget with the SHI provider, you buy your home on the open market, in the usual way.

Do I qualify?

Each SHI scheme manager will have set priorities for his or her area - and in some areas teachers are a high priority. You will have to be able to demonstrate that you cannot afford to buy a house without help from SHI - in the south-east this usually means a household income of less than pound;45,000. Savings and investments are taken into account, and you will also need to show that you have enough capital to cover such costs as stamp duty and legal fees. The scheme is restricted to first-time buyers and is to help people live within a reasonable travelling distance of work. But teachers working in further or higher education do not qualify for help, nor do teachers at private schools.

It’s also possible to apply in groups of up to four. Applications should be made through the scheme providers listed on the Housing Corporation website (see resources).

Sounds a great scheme It is - for those who manage to get help from it. But the numbers are just a small drop in a very choppy ocean. And for young teachers who don’t want to be tied down, reasonable rental accommodation is a more pressing priority than home-buy schemes. There is also real concern that the flagship scheme will make the housing crisis worse. Several housing organisations have argued that giving out special grants will push house prices even higher and fails to tackle the fundamental problem of a lack of housing of the right type, size and cost in the right places.

“The SHI is counterproductive,” says Richard McCarthy, chief executive of the Peabody Housing Trust, the biggest housing association in London. “It doesn’t increase supply, but it does increase demand - so the market just nudges up a bit more.”

What are the alternatives?

Teachers’ salaries have to rise, or the supply of affordable housing has to catch up with demand. Either way, it’s a daunting problem.

A report earlier this year by the Joseph Rowntree Foundation found that house building is at its lowest level since 1924. It also suggested that more than 4 million new homes are needed in the next 20 years to settle rampant house price inflation and tackle shortages. This is equivalent to building a town the size of Reading every year.

The Government has responded with details of a huge expansion of house building, investing pound;1.4 billion over the next 10 years to create up to 200,000 new homes, including three “millennium communities” at East Ketley in Shropshire, Milton Keynes and Hastings. Although this will be mostly private development, there will be strong emphasis on higher-density, more affordable housing.

In the capital, where land is scarce, a more imaginative approach will be needed. Government research claims there is room for 25,000 new homes for key workers above car parks, supermarkets and petrol stations.

Fab prefabs?

It’s been suggested that the spaces could be filled with “prefab” housing - cheap, modular mass-produced homes. Critics may doubt the allure to potential teaching recruits of the prospect of a prefab over a car park, but the Government insists modern factory-assembled housing is stronger and healthier than traditional bricks and mortar.

Piercy Conner architects believe their microflats (see picture, page 15) are prefab perfection. Based on the interior design of luxury yachts, they offer every mod con in a space about two-thirds the size of a one-bedroom flat, for under pound;100,000. The company has a huge waiting list of potential buyers and is hoping to find a site, possibly for several hundred microflats, within the next few months.

Why are we obsessed with owning a house? Forget fancy economic theories. Think basic human emotions - snobbery, greed and fear. Although countries such as Spain and Italy have higher rates of owner-occupancy than Britain, the preoccupation with rising house prices is a peculiarly British obsession. Because we live on a small, densely populated island where land is at a premium, house prices are kept high. As property prices keep going up, people who don’t own a house feel they are missing out. In a vicious circle, they desperately try to buy a place of their own, increasing demand, and sending prices higher still. Throw in a shaky stock market and low interest rates that make owning cheaper than renting, and it’s no wonder that bricks and mortar are seen as the perfect investment. Then there’s the social prestige of home-owning, a throwback to the days when Britain bred two social classes - landlords and tenants. The phrases “getting on the property ladder” and “an Englishman’s home is his castle” sum things up nicely. House-owning is a form of social and economic climbing.

Has it always been like this ?

Only 10 per cent of people owned their own home 100 years ago. The move towards ownership started not in the south-east but in the north-west. Mill and mining towns established building club funds - into which every member paid weekly until there was enough money to build homes for everyone. By 1930, average weekly mortgage repayments (10 shillings) were less than average weekly rent prices (11 shillings) - a clear incentive to buy your own home. By 1945, one person in three was an owner-occupier. Then, between 1951 and 1964 disposable incomes rose and the proportion of homeowners leapt to almost 50 per cent. The final surge came in the 1980s, when the sale of council homes took the figure up to around 70 per cent, where it remains.

Do other countries have the same problem?

Unlike the UK, many European countries still regard renting as a quality option rather than a last resort. France, Germany, the Netherlands and Sweden all subsidise private renting, which is invariably cheaper than buying. They also have a different architectural tradition, with more high-density, high-rise city developments.

But other countries where buying is popular suffer similar problems. In Japan, children commonly inherit 100-year mortgages from their parents. And in the US, the Mortgage Bankers Association of America reported last year that a vast number of middle-income families were unable to find housing they could afford.

Banks that like to say yes

Even if you think you can’t afford to buy a house, it’s worth doing the sums to make sure. Some mortgage lenders have special deals for teachers and other public workers. The Bradford and Bingley, for example, recently had a mortgage promotion that offered to lend teachers up to five times their annual salary. Whether it’s wise to borrow that much is another question. The Teachers Building Society, meanwhile, offers 100 per cent mortgages to NUT members. “We try to be sympathetic,” says Mike Hislop of TBS. “We recognise teaching as a relatively secure career, and because it’s a fixed pay scale we take account of what people will be earning in a few years’ time.”