17 Dec House prices forecast to jump 50% in next 10 years
House prices are set to leap by another 50% over the coming decade, reaching £419,000 on average across the UK by 2025, a report predicts.
The increase means that house prices will be around £139,000 higher typically than the current average of around £280,000, according to the report, compiled by the Centre for Economics and Business Research (Cebr) for the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (Arla).
In London, the average property is expected to be worth £931,000 in 10 years’ time – up from around £515,000 now – as housing supply shortages continue to push up prices.
Average house prices across the South East and the East of England are also expected to be well over the half-million pound mark by 2025, at £646,086 and £574,374 respectively.
In the South West, the typical property value is expected to be over £360,000 in a decade’s time, while house prices will also have been pushed over the £250,000 mark in Scotland, Yorkshire and the Humber, the North West of England, as well as the East and West Midlands, the report predicts.
In Wales, the average house price is expected to be more than £217,000 by 2025, while in the North East the typical value is predicted to be just over £224,000.
Northern Ireland is expected to continue to have the lowest house prices of any UK region, at just over £187,000 typically by 2025.
Mark Hayward, managing director of the NAEA, said: “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.”
The report also expects rents to surge by 27%, from the current UK average of £134 per week to £171 by 2025.
It said renters in London can expect to be paying more than one third (34%) more in 10 years’ time, from £234 a week now on average, to £314.
David Cox, managing director of Arla, said that the three percentage point stamp duty hike for buy-to-let investors, which is set to come into force in April, could add to the upward pressure on rents as it could put off would-be landlords from entering the market.
He said: ” 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.”
Arla and the NAEA said the Government should introduce several measures to tackle the “housing crisis” and housing supply shortages, including offering a stamp duty exception to pensioners who want to downsize to a smaller property.
An advisory body in the form of an independent housing policy committee, which is not directly elected, should also be set up.
The Government should also incentivise firms in the construction sector to offer more apprenticeships and training programmes, they said.
A Department for Communities and Local Government (DCLG) spokesman said: “The Government recently announced the biggest, boldest and most ambitious plan for housing in a generation with a doubling of the housing budget.
“The number of new homes is already up 25% in the last year and we are working closely with housebuilders to ensure they have the skills needed to get homes built. Figures show 100,000 jobs have been created in the construction sector in last two years alone, and over 18,000 apprenticeships created .”