Average house price to QUADRUPLE to almost £1million in 20 years, leaving half of under-35s still living with mum and dad
05-04-2014
Average house price to QUADRUPLE to almost £1million in 20 years, leaving half of under-35s still living with mum and dad
- If house prices continue to rise on current trend will hit £900,000 by 2034
- More than half of 20-34-year-olds will be living with their parents by 2040
- Report by Shelter and KPMG warns 100,000 more homes needed each year
By Matt Chorley, Mailonline Political Editor
The average house price in England will reach almost £1million within two decades unless urgent action is taking to tackle the country’s property market, an alarming report warns today.
If prices continue to rise on current trends, by 2034 the average home will cost £900,000, according to charity Shelter.
It means more than half of all 20 to 34-year-olds could be living with their parents by 2040 after being ‘priced out’ of the market.
Reserach by Shelter and KPMG shows how average house prices in England will hit £902,763 by 2034 on current trends
The research, compiled by Shelter and KPMG, found that property prices could quadruple from the current level of around £220,000 if more is not done to tackle the housing shortage.
If property prices continue to rise as they have over the last 17 years, the cost of an average home in England will be £446,000 in 2024, ballooning to £903,000 ten years later, the research predicts.
At present, the average home in England costs around £225,000.
The report also warned that rocketing prices would prevent children flying the nest, as by 2040 half of those aged 20-34 will still be living with their parents.
Marianne Fallon, UK head of corporate affairs at KPMG, said England’s housing market is ‘a big and messy problem’.
She said: ‘For many people, particularly those in their twenties, the aspiration of owning their own ‘castle’ is fast becoming a fairy tale.’
Falling rates of house building since 1946 has seen a sharp rise in house prices
Falling rates of house building since 1946 has seen a sharp rise in house prices
Home ownership among the under-35s has fallen markedly in the last two decades
The number of 20-34-year-olds has risen dramatically as more young people are priced out of buying a home
The number of 20-34-year-olds has risen dramatically as more young people are priced out of buying a home
Companies’ ability to ‘attract and retain talent’ is also affected, according to KPMG, as young people are put off living and working in London by the astronomical cost of buying a property.
A senior official at the Bank of England last night also voiced concerns about rising property prices.
Chief economist Spencer Dale said: ‘We know we should be nervous about what’s going on in the housing market.’
The Shelter report, titled Building The Homes We Need, maps out a programme for the next parliament that it says would help the next government turn the tide on the housing shortage by raising house building levels to 250,000 a year by 2021, which would meet the growth in demand.
Among the suggestions to fix what Shelter describes as a ‘broken’ market is the creation of a new ‘national housing investment bank’, which would provide low cost, long term loans for housing providers, as part of a programme of new ways to finance affordable house building.
It said the bank could also offer special savings accounts, such as ‘housing Isas’ to raise finance from retail deposits.
The rate of private sector housebuilding has tumbled since the 2007 financial crash
The rate of private sector housebuilding has tumbled since the 2007 financial crash
The report also warns that homes in the UK are much smaller than those seen in countries around the world
The report also warns that homes in the UK are much smaller than those seen in countries around the world
Experts have pointed to an imbalance between the supply of homes for sale and demand from would-be buyers as putting an upward pressure on house prices as the housing market recovery gathers pace.
Despite Government support schemes, the housing market is ‘increasingly skewed’ towards people who are reliant on getting cash help from their parents, the report said, with only around one third of first-time buyers in 2011 managing to get on the property ladder without needing any extra financial help.
The research estimates that more than half of all 20 to 34-year-olds could be living with their parents by 2040 due to being ‘priced out’ of the housing market unless there is radical change.
The report said: ‘If nothing is done to increase the supply of homes, house prices will almost certainly continue to rise faster than wages, pricing yet more people out of home ownership.’
The report also suggests empowering local authorities to create ‘new home zones’, which could generate over 8,000 extra homes a year.
Shelter and KPMG warn that high land prices are the root of high - and rising - house prices
This idea would involve a local authority selling a plot of land off for a cheaper price to a developer who in return will build affordable homes, rather than the land going to a developer who might pay more for the land but wants to use it to build homes at the top end of the market.
The report also suggested that developments could be speeded up by charging council tax on homes that should have been built after a reasonable period for their construction has passed.
More garden cities should also be built in ‘high demand’ areas, the report said. It said the next government should consult on and propose sites for up to five new garden cities comprising around 30,000 homes.
The report said more should be done to help smaller builders get back into the market by using government guarantees to improve access to their finance.
Campbell Robb, Shelter's chief executive, said: ‘Our chronic shortage of affordable homes means that a generation face a future of living in their childhood bedrooms into their thirties. But this report proves that the next government can turn the tide on the housing shortage within a single parliament.
‘The thousands of young people and families forced to watch their dream of stable home slip further out of reach are already paying the price for successive governments' failure to build the homes we need. With housing now a top issue for voters, politicians of all parties are rightly beginning to feel the need to act.’