The ARLA and NAEA Housing 2025 report forecasts that the average UK home price, currently stood at around £280,000, will appreciate by half their existing value by 2025 – reaching an average price of £419,000.
House price growth is expected to be led by London, where it is estimated property prices will almost double in the 10 years, increasing from £515,000 to £931,000, fuelled primarily by a widening supply-demand imbalance in the market.
The ARLA and NAEA Housing 2025 report also projects that there will be a drop in the proportion of UK households that own their own property over the next decade, down from its existing rate of 62 per cent to 55 per cent, owed mainly to high home prices and the ageing of the baby-boom generation.
“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,” said Mark Hayward, Managing Director, NAEA.
He added, “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.”
A declining homeownership rate is not just expected to drive house prices up but also boost demand for rental properties, with the proportion of private renters in the UK expected to increase from 20 per cent of households today to almost 29 per cent by 2025.
Rents are predicted to rise by more than a quarter from a current UK average of £134 per week to £171 in 2025. Again, those residing in the capital will be worse off as they will need to pay around one-third extra in rent per week by 2025, an increase from the current average of £234, up to £314.
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.”