House Prices To Soar 50% And Rent By Over A Quarter By 2025
- Renting population to increase by 9%, while home ownership will fall by 7% by 2025
- Drastic and immediate policy overhaul is necessary to fix Britain’s broken housing market
- ARLA and NAEA launch Housing 2025 report, compiled with CEBR
Rents are set to sky-rocket, and buying a house is getting further out of reach for many, according to
the Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA)
Housing 2025 report. Compiled with Centre for Economics and Business Research (Cebr), the report
predicts the state of the property market in ten years’ time, and suggests what can be done to repair
it.
With the average house price currently around £280,000, the Housing 2025 report predicts house
prices will increase by half (50%) their current value by 2025 – reaching an average price of £419,000.
It’s even worse news for those living in the capital, as house prices are expected to nearly double in
the next decade in London, rising from £515,000 to £931,000.
The rise of rental costs
For those planning to enter the rental market in the next few years, the news is just as bleak. Rents
are predicted to increase by 27% from a current UK average of £134 per week to £171 in 2025. Again,
those living in London will be worse off as they’ll need to pay 34% extra in rent per week by 2025, an
increase from the current average of £234, up to £314.
Lower homeownership rates amongst the working age population and the ageing of the baby-boom
generation will continue to drive a decline in the proportion of UK households that own their own
home. Currently around 62% of the working population owns their own home; the ARLA and NAEA
Housing 2025 report predicts this will fall to 55% in the next ten years.
A declining homeownership rate will boost demand for rental properties, and drive house prices up.
The Housing 2025 report also predicts the proportion of private renters in the UK will increase from
20% of households in 2015, to nearly 29% by 2025.
David Cox, managing director, Association of Residential Letting Agents (ARLA) says: “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.”
Mark Hayward, managing director, National Association of Estate Agents (NAEA) says: “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. 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. 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.”
ARLA and NAEA recommend the following solutions to solve the housing crisis:
In order to prevent continued supply shortages and make house prices and rental costs more
affordable for the UK’s expanding population, a drastic and immediate policy overhaul is necessary.
- The government should make a scheme similar to the London Rental Standard mandatory
across the country, to create a way of distinguishing letting agents and landlords who
maintain their properties to a high standards, thereby improving the condition of private
rental properties coming onto the market - The government should continue its effort to revisit the idea of reducing the area of the
Green Belt and set up a committee which would explore this possibility in detail. - Giving a wider scope of powers to the Private Rented Sector Taskforce and providing
government debt guarantees would encourage large-scale institutional investment into the
private rental sector, creating more available properties and helping to bring rental costs
down - The government should add construction sector occupations, such as brick layers, to its
shortage occupation list, making it simpler for employers to hire non-EU nationals. - Longer term, the government should incentivise firms in the construction sector, to offer
more apprenticeships and training programmes. - The government should form an advisory body in the form of an independent housing policy
committee, which is not directly elected. - The government should offer a stamp duty exception to pensioners looking to downsize their
property.
David Cox, managing director, Association of Residential Letting Agents (ARLA) and Mark Hayward,
managing director, National Association of Estate Agents (NAEA) say: “Our simple plea before the
election was ‘Britain deserves better’. Since the General Election, the government has pledged to solve
the acute problems facing the property industry, aiming to build one million new homes before the
end of this Parliament in 2020. But words simply aren’t enough. The housing crisis Britain is facing is
deep-rooted and if it is to be solved, it will require finance, suitable land, time, new skills and most
importantly, the appropriate national regulation of the key stakeholders, not least the estate agents
and letting agents that form our membership. We are calling for change – and it needs to happen
soon.”
House Prices To Soar 50% And Rent By Over A Quarter By 2025
