House prices are set to rise 50% to over £400,000 in the next ten years, according to a new report by the Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA).
The bodies predict that the average house price will rise from £280,000 to £419,000 by 2025, making it even more difficult for first-time buyers to get a foot on the property ladder.
Those living in London will see prices nearly double over the next decade from £515,000 to £931,000.
Rents are also predicted to sky-rocket by 27% from a current UK average of £134 per week to £171 in 2025.
Those living in London will be worst hit as they will need to fork out an extra 34% from the current average of £234 to £314 by 2025.
The report said the number of people owning their own home will drop from 62% to 55% by 2025, driven by lower homeownership rates amongst the working age population and the ageing of the baby-boom generation. This will boost demand for rental properties and help drive prices up.
House price inflation, low wages, tighter lending restrictions and a shortage of affordable housing will continue to make owning a home a distant dream for many. Increased rental costs will also make it more difficult for current renters to save for a house.
David Cox, managing director of 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.”
In a bid to tackle the housing crisis and boost home ownership for first-time buyers, George Osborne announced in last month’s Autumn Statement that on top of building 400,000 new properties, the government would increase stamp duty by 3% on buy-to-let and second homes.
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.”
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