Uk
Fewer young people likely to be able to buy their own home in the future
Even if the current plan to build 220,000 new homes in England each year until 2031 is fulfilled young people aged 25 to 34 will still be less able to live in their own home that they did in 2011, according to new research. An analysis report from the Town and Country Planning Association says that currently only 54% of the number of homes needed are being built, putting pressure on prices and rents, and the housing crisis is worse in London and the wider south east where 55% of the homes required need to be located. Even if the homes required are actually built the latest government household projections suggest that young people across the country are struggling more than ever to live independently because of the cost of housing. The research says that the housing requirement to meet projected household formation until 2031 is actually lower than previously anticipated but this is because younger people are already finding they cannot afford to form independent households. Housing shortages and the resultant high prices and rents mean that young people are living with parents or in house shares for longer, rather than forming a household of their own. Rising student debt levels and potential future welfare reform are likely to make their position even more difficult. ‘This research shows that, while it looks as if the projected number of needed homes has dropped, this is because many people now can't afford their own home either to rent or buy and are living with parents or other people longer than they would like to,’ said Kate Henderson, TCPA chief executive. ‘The government needs to see this as a wakeup call. It has already fallen behind on their targets for house building, and this is now having a devastating effect on young people. More needs to be done to build the necessary number of high quality, affordable homes for people who need them,’ she added. Starting in 2011, a minimum of 220,000 homes are needed each year to 2031 if house building is to keep up with projected household growth and even this is not enough to enable couples aged between 25 and 34 to have the same chance of living in their own home as their counterparts in 2011. Of the new homes needed, over half, 55%, are needed in London and the surrounding area. In contrast, in the north east, the number of new households is expected to only rise by 11% over 20 years. Professor Christine Whitehead co-author of the research and Emeritus Professor at the London School of Economics it is a major concern that young people are likely to be less well housed in 2031 than their counterparts in 2011. ‘If house building cannot be increased at least to the projected levels other household groups will find themselves in the same boat,’ she added. The research also shows that the government is already falling short… Continue reading
First time buyers need average earnings of £50,000 to buy a home
First time buyers in the UK need to earn on average of £50,000 a year to get on the property ladder, new research reveals. However, in 51 out of 65 cities, the average salary is below the minimum required to buy a flat, according to the study from comparison website GoCompare. The most affordable place to buy in the UK is Blackburn where a salary of £14,000 a year could be enough to buy a flat but a minimum household income of £140,000 a year is needed to buy a flat in London. In the capital a minimum of £275,000 is needed to buy a detached house where the average price is at £869,415 yet the median average salary in the capital is just £30,338. So Blackburn is almost 10 times cheaper than London. The median average salary in the Lancashire town is £18,444, making it one of the few places in the UK that are affordable. After Blackburn, the cheapest places to buy property are Hull, Blackpool, Grimsby and Stoke-on-Trent where a salary of just £15,000 could be enough to purchase a flat. Outside of London it is Brighton, Edinburgh, Bristol and Oxford which are the most costly. Minimum salaries to get on the property ladder in these cities are £60,000, £60,000, £58,000 and £54,000 respectively. ‘Although owning a home may be achievable in places like Blackburn and Sunderland, in other parts of the country the rapid rise in property value and a growing urban population is pricing many of the British public out of home ownership,’ said Ben Wilson, home insurance expert at GoCompare. ‘London’s high prices are well documented, but it’s in other parts of the south of England that the gap between average salary and average house price is at its most alarming, with places like Brighton requiring a minimum household income of £180,000 to afford a detached house,’ he added. Continue reading
UK property price set to rise by an average 17% by end of 2020
House price growth across the UK’s mainstream markets has exceeded expectations in 2015 but there is still room for further increases providing interest rates do not rise too steeply, according to new research. The timing and pace of interest rate rises, coupled with patterns of economic growth at a regional level, will dictate the distribution and sustainability of any increases, says the report from international real estate adviser Savills. The firm forecasts that prices will rise by an average of 17% by the end of 2020, ranging from 21.6% in the South East to 12% in the North East, assuming that mortgage rates do not exceed 4.5%. Any combination of higher house price growth or high mortgage rates could leave affordability looking stretched. Much depends on the speed at which interest rates rise. If rates rise too quickly mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise,’ said Lucian Cook, head of Savills residential research. ‘That risk has been mitigated by recent mortgage regulation which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past 10 years,’ he added. London’s mainstream markets are expected to underperform its hinterland, with average growth of 15.3% forecast over the next five years, though this will range from 20% to just 10% depending on specific location and post downturn levels of house price growth. Lower value outer London boroughs have greater remaining capacity for house price growth than higher value parts of the capital, having grown in line with the South East and East of England rather than London itself over recent years. While Walthamstow and Lewisham are expected to show the strongest growth, outperforming the mainstream submarkets of boroughs such as Hammersmith and Fulham and Richmond. The strongest price rises are therefore expected in parts of the south and east of England, which offer value relative to the capital so should benefit as the ripple gains traction. Growth beyond will depend on the strength of regional wealth generation and the ability of cities such as Manchester and Birmingham to act as catalysts to reinvigorate their housing markets. At the same time, annual transaction levels, at just over 1.2 million this year, are expected to reach 1.3 million in 2020, far short of the pre-crunch norm of around 1.7 million, as deposit affordability continues to act as a brake on demand and the changes to the taxation of buy to let property restrict the ability of some landlords to expand their portfolios. Continue reading
