London lettings agency Benham and Reeves has produced figures showing, indirectly at least, exactly why buy to let and property investment looks a safe bet for the long term.
Analysing historic first time buyer price data from the Land Registry, across the UK and in the capital’s boroughs, it has suggested some eye-watering future prices for housing if the next three decades mirror the picture since the 1980s.
The agency says today’s average first time buyer is aged 34 and purchases a home in England costing £207,526.
However, in 34 years time - so assuming a child born this year becomes a first time buyer in 2053 - the price will be an average of £1,214,381 and affordability becomes much, much worse for anyone wanting to buy.
That all-England figure pales, of course, in comparison to the London-only figure.
Whereas the average FTB house price in London is now £412,679, this could increase to a huge £4.5m over the next 34 years.
As an example of the scale of the north-south divide, the cheapest area to buy for FTBs born today would be the North East with a predicted price of £210,739 in 34 years time - not even double the £110,645 today.
Benham and Reeves director Marc von Grundherr says: “This research considers the ups and downs of the first-time buyer market historically and how things could play out for the generation of first-time buyers being born today if these trends were to repeat themselves.
“Of course, it’s impossible to predict the future of the UK property market, particularly given the current turbulence caused by wider economic and political factors, however, this research acts as a warning of what could happen if we continue to fail in the delivery of affordable starter homes.
“Not only does it show the huge jump in prices over previous years but how this could worsen further down the line. While we hope that prices won’t reach these dizzying heights, we’ve certainly seen stranger things happen across the UK property market in the last 34 years, so who knows what the next 34 may bring.”
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In spite if these alarming predictions Marc von Grundherr doesn't say wether he believes them to be likely or probable.
If they were to be seriously probable, a root and branch change in the way such prices are determined ought clearly to be most carefully considered. I have already outlined the need for this and the methods by which such improvements may be achieved.
It makes no sense to countenance the financial cruelty predicted here to all future would-be owner occupiers.
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