London house prices to double by 2025
London house prices will roughly double from £515,000 to £931,000 in 2025, a report from the Association of Residential Lettings Agents and the National Association of Estate Agents has forecast.
For the whole UK house prices are set to increase by half (50%) to reach an average of £419,000.
Mark Hayward, managing director, National Association of Estate Agents, said: “Ongoing house price inflation, combined with low wage inflation, tighter lending restrictions and a shortage of affordable housing, means owning a home will continue to be distant dream for many.
“Increased rental costs will also make it more difficult for current renters to save for a house deposit; as much of their income will be eaten up in rent.”
Savills research analyst Edward Green questioned the London house price prediction, as he responded: “I don’t expect London prices to double over the next decade because the capital has already experienced strong growth.”
He pointed to Savills’ latest market forecast which predicted London prices to rise by 15.3% over the next five years, although they should grow by 5.5% in 2016 alone.
David Cox, managing director, Association of Residential Letting Agents, said: “Rent costs are already growing at a rate that people are struggling to keep up with, and they’re due to become even less sustainable over the next decade – particularly when the new landlord tax sets in, which will put off many would-be landlords from entering the market.
“If we’re to see the property market lifted out of its current state, we need to help the rental market from top down as well as bottom up, ensuring landlords are not penalised for their choice of income, and they can in turn give tenants the best possible price and service they deserve.”
ARLA and NAEA made a list of recommendations to make house prices and rents more affordable.
They recommended offering pensioners a stamp duty exemption to encourage them to downsize, for the government to set up committee to look at reducing Green Belt and to form an advisory body in the form of an independent housing policy committee.
The government should add construction sector occupations such as brick layers to its shortage occupation list to make it easier for employers to hire non-EU nationals, while longer-term it should incentivise firms in the construction sector to offer more apprenticeships and training programmes, the report said.
The associations also called on the government to distinguish between letting agents and landlords who maintain their properties to a high standard in the whole of the UK with a scheme comparable to the London Rental Standard.
Rents will also rise by 34% in London and 27% for the whole of the UK to £314 and £171 per week.