A study produced by the CEBR for estate agent associations shows UK house prices are expected to rise by 50% in the next ten years.
The National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (NRLA) estimates house prices will skyrocket by 50% in the next ten years taking the average from £280,000 to £419,000.
Compiled by the Centre for Economics and Business Research (CEBR), the study shows for those living in London prices are expected to double from the current average of £515,000 to a staggering £931,000.
For first time buyers the study only increases the pressure as further prices rises would require a larger deposit or higher earnings to purchase their first home.
In contrast higher values for remortgage buyers offer the opportunity to release capital which they can use to improve their home.
Fall in homeownership expected
The study expects a decline in the overall number of homes owned in the UK as the rate of homeownership amongst the working age population and ageing baby-boom generation continues to decline.
Over the next ten years the number of the working population that own their own home will decline from 62% today to 55% by 2025.
At the same time the study shows the proportion of private renters will increase from 20% in 2015 to 29% in ten years time.
This rise will occur even though the cost of renting is expected to increase by 27% from an average of £134 per week to £171 by 2025. Those in London will see a higher rise in costs of 34% from £234 per week to £314 in ten years.
House prices projected to rise
Mark Hayward, managing director of the NAEA, has said the only way house prices are going is up which is not what aspiring first time buyers will not want to hear.
Owning a home will continue to be a distant dream for many due to house price inflation combined with low wage inflation, tighter lending restrictions and a shortage of affordable housing.
For home movers higher house prices increase the gap between their current home and the next so they need a larger mortgage.
Rising house prices in the future allows the equity release buyer to access money using a lifetime mortgage and use this to consolidate debt, for home improvements or holidays.
Mr Hayward also said increased rental costs will also make it harder for current renters to save for a house deposit as most of their income is used to pay for rent.
David Cox, managing director of the ARLA, said buying and renting a home is out of reach for many with rental costs growing at a rate that will be less sustainable in a decade.
The extra taxes imposed on buy-to-let landlords will discourage many from entering the market and only help to drive up rental costs.
What are your next steps?
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