More Adults Under 40 to Go for Rented Accommodation
Experts across agencies predict that the house prices in the UK are slated to rise this year. This expected rise is due to shortage in supply of new units by the housing industry in the country and the rising demand by the private sector.
PwC claims that the UK housing prices would enhance by 5% this year which would outpace the average 3 to 4 percent increases in wages. The accountancy firm predicts that the by 2020 the price escalation of UK homes would average out at £360,000 for an average house.
The Centre for Economics and Business Research hiked its 2015 house price growth forecast to 4.7 per cent yesterday amid concerns over supply said the City AM.
This push in the upper limit of housing prices have been primarily due to the sluggish growth in the UK housing sector to churn out more units while the private rented sector has grown from 2.3 million in 2011 to nearly double it at 5.14 million in 2014. According to The Telegraph, the number would reach 7.2 million by 2025.
Hence there is a rising demand for new houses with a sluggish supply and this disparity in supply and demand is expected to push the housing prices.
Based on these calculations, PwC predicts that in another decade, more than half of people under their 40s will be renting from private landlords.
Rise in mortgage prices, as a result of gradual interest rate rises, is also another reason for the expected rise in housing prices and more and more youth looking to find rented accommodations. The total mortgage value of homes in 2015 was £ 8 million and in 2014 it was £ 10 million. It is expected that the rising mortgage costs would pull this figure down to £7.2 million. This is indicative that lesser number of new houses is being bought.
"Limited housing supply, affordability and mortgage availability make it harder for first time buyers to get on the housing ladder", the PwC points report out.
"Driven by a decade of soaring house prices pre-crisis and lower loan-to-value ratios post-crisis, the deposits needed by first-time buyers have risen significantly,” PwC chief economist Richard Snook said.
This is compounded by a reduction in the buying capacity of younger generations who prefer renting privately and only a section of them are able to make a new purchase later on in their adult lives.
Further planning reform, action to address skills shortages in the house building sector is one of the ways that this threat can be mitigated in the long run. PwC also points out that cheaper mortgages and enhanced financial incentives to build more homes should also accompany the thrust in skill development and planning for affordable housings.
Despite the rise in demand, the accounting firm expects that private developers may be cautious about expanding too rapidly while the recent cuts to social rents announced in the Budget are expected to dissuade the local authorities and housing associations from engaging in affordable housing projects.
On Wednesday, there was a rise of 1.1 percent in prices of homes in London and that have two bedrooms or fewer with the first-time buyers being the primary customers, according to Bloomberg.
The Guardian says that private landlords are buying up smaller housing stock in smaller cities. The PwC report seemed to have been ratified by the Royal Institute of Chartered Surveyors a week earlier which noted that the number of homes listed for sale was at its lowest level since records began in 1978.
The PwC report concludes that the upswing in the housing prices and the shortage in supply are expected to continue for another decade in the UK.
(Source: www.digitallook.com & www.theweek.co.uk)
PwC claims that the UK housing prices would enhance by 5% this year which would outpace the average 3 to 4 percent increases in wages. The accountancy firm predicts that the by 2020 the price escalation of UK homes would average out at £360,000 for an average house.
The Centre for Economics and Business Research hiked its 2015 house price growth forecast to 4.7 per cent yesterday amid concerns over supply said the City AM.
This push in the upper limit of housing prices have been primarily due to the sluggish growth in the UK housing sector to churn out more units while the private rented sector has grown from 2.3 million in 2011 to nearly double it at 5.14 million in 2014. According to The Telegraph, the number would reach 7.2 million by 2025.
Hence there is a rising demand for new houses with a sluggish supply and this disparity in supply and demand is expected to push the housing prices.
Based on these calculations, PwC predicts that in another decade, more than half of people under their 40s will be renting from private landlords.
Rise in mortgage prices, as a result of gradual interest rate rises, is also another reason for the expected rise in housing prices and more and more youth looking to find rented accommodations. The total mortgage value of homes in 2015 was £ 8 million and in 2014 it was £ 10 million. It is expected that the rising mortgage costs would pull this figure down to £7.2 million. This is indicative that lesser number of new houses is being bought.
"Limited housing supply, affordability and mortgage availability make it harder for first time buyers to get on the housing ladder", the PwC points report out.
"Driven by a decade of soaring house prices pre-crisis and lower loan-to-value ratios post-crisis, the deposits needed by first-time buyers have risen significantly,” PwC chief economist Richard Snook said.
This is compounded by a reduction in the buying capacity of younger generations who prefer renting privately and only a section of them are able to make a new purchase later on in their adult lives.
Further planning reform, action to address skills shortages in the house building sector is one of the ways that this threat can be mitigated in the long run. PwC also points out that cheaper mortgages and enhanced financial incentives to build more homes should also accompany the thrust in skill development and planning for affordable housings.
Despite the rise in demand, the accounting firm expects that private developers may be cautious about expanding too rapidly while the recent cuts to social rents announced in the Budget are expected to dissuade the local authorities and housing associations from engaging in affordable housing projects.
On Wednesday, there was a rise of 1.1 percent in prices of homes in London and that have two bedrooms or fewer with the first-time buyers being the primary customers, according to Bloomberg.
The Guardian says that private landlords are buying up smaller housing stock in smaller cities. The PwC report seemed to have been ratified by the Royal Institute of Chartered Surveyors a week earlier which noted that the number of homes listed for sale was at its lowest level since records began in 1978.
The PwC report concludes that the upswing in the housing prices and the shortage in supply are expected to continue for another decade in the UK.
(Source: www.digitallook.com & www.theweek.co.uk)