A property expert has outlined the key factors required to help ensure that an anticipated house price boom becomes a reality.
Reports earlier this week suggested the house market was on the verge of a huge bounceback with prices estimated to surge by 20 percent in five years.
Commenting, property expert Jonathan Rolande, the founder of House Buy Fast, said: “Many forecasts predict values are set to rise by at least 20 percent in the coming years as stability returns. This has led to claims that the average house price could reach £346,500 by 2028. Nobody knows for certain what will happen. I believe such high estimates are very optimistic. But on the other hand, interest rate cuts, which we expect to see ahead of a General Election, could stimulate the market and lead to prices rising again. There are also many regions of the UK, especially in the north west and the Midlands where there is the potential for higher price growth in the years ahead. So the potential is there for growth, but certain barriers need to be overcome first.”
Outlining what those barriers are, Jonathan said:
- Lack of wage growth. In 2001 the average house price was 5x the average wage. It is now 8x that. Wages have not kept up with the huge increases in prices. Until this happens it will be hard to see house prices rising that sharply.
- Interest rates. The BofE hiked rates 14 times in a row. That has been paused but rates have been left at a relatively high rate, hitting affordability further. What’s more, even with base rate rises, many lenders have increased the cost of mortgages by increasing rates themselves and/or pushing up application fees. Cuts, which we hope to soon see, would help.
- High Rents. This makes Buy to Let an attractive option for investors whilst simultaneously crushing the hopes of millions hoping to save a deposit for their own home but are unable to do so because of the amount of rent they need to find monthly. It’s vital that rents start to become more affordable.
- Lack of new build. A biggie. We fall dramatically short of targets every year. Too few homes drive up prices. A lack of attractive new builds acts as a deterrent to downsizers who often remain in their large family home for want of something suitable to move to.
- Political uncertainty and a lack of positivity. A looming election and some (at best) mixed figures on the economy deter buyers from taking on the vast and long-term commitment of property ownership.
- Finally, more households are single. Twice as many children now don’t live with both parents, compared to 1970. And it’s estimated as many as one in three homes are now single occupancy. Whether these residents are living alone by choice, or they’re simply unlucky in love, is hard to estimate. But one thing’s for sure, if housing stock continues to diminish at the rate, it is, more singletons wishing to live on their own will end up facing heartbreak.
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