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By 2025 there may be slightly more people renting privately in the UK than owning with a mortgage, according to new research, with average prices rising to £360,000 by 2020. There will also be a greater number of mostly older people than ever before owning their home outright, amounting to almost 35% of all households, says the analysis from accountants PricewaterhouseCoopers. The analysis also says that UK house price growth is projected by PwC to average just over 5% per annum over the period to 2020. So the average residential property in the UK could be worth around £279,000 in 2015, rising to around £360,000 by 2020. Overall the total UK owner occupation rate is projected to fall from a peak of nearly 70% before the financial crisis to around 60% of households by 2025 and house price growth is projected to moderate to around 5% per annum. The report also points out that as house prices have risen much faster than earnings and social housing supply remains constrained, the number of households in the private rented sector has more than doubled since 2001. This trend is predicted to continue with an additional 1.8 million households becoming private renters by 2025. This would take the total to 7.2 million households, almost one in four of the UK total in 2025. The trend is particularly strong in the 20 to 39 so called generation rent age group where more than half will be renting privately by 2025, according to PwC’s latest UK Economic Outlook report. Also by 2025, PwC analysis finds that there could be slightly more people renting privately than owning with a mortgage. The number of households who own their home with a mortgage fell from around 10 million in 2001 to only around eight million in 2014. This is projected to decline further to just under 7.2 million by 2025 as limited housing supply and mortgage availability make it harder for first time buyers to get on the housing ladder. There will also be record numbers of people owning their own home outright. This accounts now for 8.4 million households and PwC projects this will rise to 10.6 million households by 2025, around 35% of the total. A key driver is the rising proportion of over 60 year olds in the UK, who are far more likely to have paid off their mortgages. ‘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. As a result, a generation of private renters have emerged and this will increasingly be the norm for the 20 to 39 age group,’ said Richard Snook, senior economist at PwC. ‘There is also a rising dichotomy in the market between those, mostly older, households who own outright and those, mostly younger, households who still have a mortgage or rent to pay,’ he explained. ‘Overall, we project that the proportion of owner occupiers,… Continue reading →
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