Lack of affordable homes will continue to drive price growth despite market uncertainty, say experts
A new 20-year house price forecast predicts average property values in London could rise by a staggering 80 per cent to £867,000 by 2027, and be almost £3 million a decade later.
The report, by eMoov, analysed house price data from the Land Registry over the last 20 years which it used to calculate the potential percentage increases in property values for the next two decades.
Since 1996, the main driver of price growth has been the shortage of affordable homes, with house prices in England rising by 320 per cent from an average of £56,000 in 1997 to £234,000 this year.
Property experts believe that the lack of affordable housing, coupled with a growing population, will continue to be the main issue in the housing market for at least the next 10 years.
“This research highlights the near impossible task faced by the next generation of aspirational buyers and acts as a warning to the government should they fail to address the current lack of property available, which is seeing prices once again reach dangerously inflated levels,” says Russell Quirk, eMoov.co.uk’s CEO.
|Region||Av. House price 2017||Predicted av. house price 2027||Predicted av. house price 2037|
|East of England||£278,349||£397,335||£1,311,380|
|Yorkshire & The Humber||£152,418||£164,611||£496,670|
However, the research didn’t take into account the stretched affordability of buyers.
“With the negative combination of the rising cost of living eating away at modest pay increases, it is hard to see how property prices can keep rising at a fast pace,” says Miles Shipside, Rightmove director.
“If it becomes impossible to buy, sellers will also take a hit on the price of their home due to a drop in demand.”
The rental market is likely to be main beneficiary of this trend. Already more than half of renters are over 30, and a third have children.
“Renting is here to stay,” says Johnny Morris, research director at Countrywide. “The biggest shift though will be that people will rent longer.”
Developers across the country are increasingly building homes to rent, rather than to buy, to meet the demands of a growing number of people increasingly priced out of the property market.