House prices: number of £1m+ homes to treble by 2030
02-22-2016
Average property will cost more than £500,000, says Santander study, with top prices to be found in London and the south-east
Average house prices will more than double and the number of property millionaires will treble over the next 15 years, according to a study published by Santander.
At the moment, there are less than 500,000 homes valued at more than £1m, says The Guardian. But the research, produced in association with Paul Cheshire, the professor of economic geography at the London School of Economics, predicts this will soar to 1.6 million by 2030 as property prices continue to surge.
It forecasts the average house price will rise from today's £283,565 to £349,300 by the end of this decade, adds the Daily Telegraph, and then on to £557,444 over the following decade. This implies a consistent rise of around 4.5 per cent a year.
If this proved accurate, affordability would inevitably be squeezed further, as wages are not expected to return to long-run average growth rates for a time and even then, this is around four per cent. So, the study suggests the average multiple for house purchase will increase from 7.9 times now to 9.7 times by 2030. In London, the average will rise to 16.5 times.
The UK capital and the wider south-east will also be the home to the largest portion of homes costing in excess of £1m, exacerbating an existing regional disparity. As many as one in four houses in London could be worth more than this threshold, while across the south-east as a whole, the rate would be seven per cent.
On the other hand, in the north-east, Yorkshire and Humber, north-west, Scotland and the East Midlands, the proportion would be a "negligible" less than one per cent. In one area, Torfaen in Wales, which the Guardian notes is home to more than 90,000 people, there are expected to be no homes in this top price bracket.
Of course, there is a very good chance that the market would not sustain such a prolonged increase in prices. Already growth is waning, as fewer people can afford to get on the property ladder, and there are those who reckon the market is close to a peak and a tipping point. If a hit to the yields on buy-to-let mortgages lessens the appeal of investment buying, this could help to slow growth further.