17th December 2015
UK house prices are set to jump by 50% by over the coming decade leaving it even more difficult for would-be buyers to get onto the property ladder, a new study has claimed.
The Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA) Housing 2025 report, forecasts that average prices will jump from around £280,000 today to circa £419,000 over the coming 10 years.
But it’s even worse news for those living in London, as house prices are expected to nearly double over the period in the capital, rising from £515,000 to £931,000.
For those planning to enter the rental market in the next few years, the news is just as bleak as the study predicts that rents will rise by 27% from a current UK average of £134 per week to £171 in 2025.
Again, those living in London will be worse off as they will need to pay 34% extra in rent per week by 2025, an increase from the current average of £234, up to £314.
The report stated that lower home-ownership rates amongst the working age population and the ageing of the baby-boom generation will continue to drive a decline in the proportion of UK households that own their own home.
Today around 62% of the working population owns their own home but the ARLA and NAEA report predicts this will fall to 55% in the next 10 years. As a result the demand for rental properties will soar and in turn drive house prices up.
The analysis also foresees the proportion of private renters in the UK rising from 20% of households in 2015, to nearly 29% by 2025.
David Cox, managing director, ARLA said: “Buying and renting a home is a giant step, and is out of reach for many. Rent costs are already growing at a rate that people are struggling to keep up with, and they’re due to become even less sustainable over the next decade, particularly when the new landlord tax sets in, which will put off many would be landlords from entering the market.
“If we’re to see the property market lifted out of its current state, we need to help the rental market from top down as well as bottom up, ensuring landlords are not penalised for their choice of income, and they can in turn give tenants the best possible price and service they deserve.”
Mark Hayward, managing director, NAEA added: “House prices are only going to go one way, and unfortunately that is up. For so many already priced out of the market, this is news aspiring house buyers will not want to hear.
“Ongoing house price inflation, combined with low wage inflation, tighter lending restrictions and a shortage of affordable housing, means owning a home will continue to be distant dream for many. Increased rental costs will also make it more difficult for current renters to save for a house deposit; as much of their income will be eaten up in rent.”
ARLA and NAEA have urged that “a drastic and immediate policy overhaul is necessary” to solve the housing crisis.
Together they have put forward a number of proposals. For example, they believe the government should make a scheme similar to the London Rental Standard mandatory across the country, to create a way of distinguishing letting agents and landlords who maintain their properties to high standards, thereby improving the condition of private rental properties coming onto the market.
They organisations also said that the government should also continue its effort to revisit the idea of reducing the area of the Green Belt and offer a stamp duty exception to pensioners looking to downsize their property. It also wants the government to form an advisory body in the form of an independent housing policy committee, which is not directly elected.