At the moment, it is hard enough to get onto the property ladder or find a nice, affordable place to rent. But be warned, things are only going to get worse.
In October, the Royal Institution of Chartered Surveyors (RICS) reported in their Residential Survey that the houses prices in the UK are expected to rise by 4.5% per year over the next five years. This is an overall increase of around 25%.
The chief economist at RICS, Simon Rubinsohn, has summed up the severity of the rise of property prices, and emphasises that it’s not just temporary:
“Members of RICS have predicted that properties are set to become less and less affordable to rent and buy. This makes it the Government’s priority to boost the delivery of new homes.”
This crisis is due to the increasing gap between supply and demand throughout Britain. There are too many people in Britain looking to buy or rent a property, whilst there are not enough houses being built.
Rubinsohn has gone on to explain:
“When it comes to the current condition of the property market, it is difficult to solve the problem of supply. The drop in new builds that has followed the global financial crisis has really started to hit home; on a month by month basis, the sales and letting markets continue to show how the demand is exceeding the supply.”
Studies from the Confederation of British Industry have warned us that 240,000 properties would need to be built every year to keep up with the high demand across Britain. However, only four times in the last 14 years has the quantity of houses built in one year reached 200,000, and that is still 40,000 less than the target quota!
The Office for National Statistics has reported that the average price of a house in Britain is now around £284,000, and the average price for a property in London is £522,000. These statistics show that the average house price has increased by more than 50% in the last ten years, and the prices in London are more than 90% higher!
Back in September 2015, the economist at the Council of Mortgage Lenders, Bob Pannell, wrote about how increases in the purchasing and rental prices were overtaking average earnings.
Savills Estate Agents have fuelled the fire further by reporting that:
“It has become clear that it is unlikely that the present state of the UK housing market is going to be temporary. The market conditions that we would have called ‘normal’ is a thing of the past. The property market has changed, if the change is not permanent, then it is definitely going to stay this way for the foreseeable future.”
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