If house price forecasts are on the money it will become "unaffordable to exist" in Britain
05-27-2015
The cost of a UK house to soar more than 20pc in five years
Expect a busy Autumn selling season says JLL. Photo: Justin Sutcliffe
By Anna White, Property correspondent
If house prices surge again without a radical increase in new homes it will become "unaffordable to exist" in parts of Britain for the young, the property group JLL has warned.
The cost of the average house in the UK will rise by 22.8pc over the next five years, according to the company's latest forecast, while prices in the supply-stricken Greater London are predicted to climb 29.4pc.
Adam Challis, head of residential research at JLL, has issued a stark warning that the long term squeeze on affordability, created by a lack of supply of new homes and a burgeoning population, could have a direct impact on the UK economy.
"The house building industry is not structured to be able to deliver the number of homes we need [with industry targets of 240,000 homes a year]. We need more government intervention," Mr Challis said.
Without immigration from Central and Eastern Europe the British house building industry would have ground to a halt he explained.
"We have a greying workforce and Government needs to help create an apprenticeship system and culture to support the construction industry."
The British housing market is coming out of a period of instability following rapid growth in London and luxury market and South East in 2013 and 2014 and more moderate recovery in most other regions, stimulated by the Government's Help to Buy scheme, pent up demand after the recession, and credit availability.
In this period annual price growth for the UK reached 8.4pc in the year to August and 20pc in London, the JLL study showed.
In the second half of 2014 growth slowed as buyers walked away from sky high prices, the Mortgage Market Review clamped down on lending and the top end of the market paused, fearful of a Labour victory and the introduction of mansion tax, and the annual growth rate slowed to 5pc in the year to May 2015.
Mr Challis said that there may be a period of adjustment as those sellers who have waited until after the general election in order to achieve prices reminiscent of 12 months ago may still have to lower their expectations.
However, as more new stock comes on to the market, exciting wannabe movers, values will start to creep up.
"I wouldn't be surprised if we have a busy autumn selling season," he said.
The report found that the average price in London (£463,000) is now more than 4.5 times the equivalent in the North East, the least expensive region, and 2.6 times the national average.
Renting in London will also increase by 13.7pc by 2020 as the home ownership dream continues to be out of reach for many.
"Affordability remains a consistent theme right across the housing tenure spectrum; home owners, private renters, and those adjusting to the affordable rent regime," Mr Challis said.
"A failure to address elevated house price inflation is the most pressing challenge facing Government and the industry...the housebuilding industry is not set up to get anywhere close to housing targets and even radical solutions would take several years to improve the current state of affairs."