Just when you thought the housing market couldn’t get hotter: the average London house price is set to reach £931,000 by 2025.
UK house prices are set to rise by 50 per cent, while rents will increase by more than 25 per cent by 2025, according to the Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA) joint housing 2025 report.
The average house price in the capital is currently £515,000, but it is set to almost double in the next 10 years. The pace of growth is far great than the rest of the UK: by 2025 the average UK house price will be £419,000.
The news is just as bad for renters: rents will increase by 27 per cent in the UK as a whole, and by 34 per cent in London up from a weekly average of £234 to £314.
Unsurprisingly, the rate of home ownership will fall by nine per cent over the next ten years, to 55 per cent of the working age population, while the proportion of private renters will increase from 20 to 29 per cent.
Mark Hayward, managing director of the National Association of Estate Agents, 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.
“Increased rental costs will also make it more difficult for current renters to save for a house deposit; as much of their income will be eaten up in rent.”
The report calls for the government to address the problem by offering debt guarantees to encourage institutional investment, incentivising construction firms, and adding construction-sector jobs to the shortage occupation list, making it easier to hire non-EU nationals.
It also suggests stamp-duty exemptions for pensioners looking to downsize, and extending the London Rental Standard across the country, to ensure high quality rental properties.