The Liberal Democrat’s recently suggested that average UK house prices could surpass the £1 million mark by 2032.
The Office for National Statistics’ (ONS) latest House Price Index shows that average UK residential property values rose by 7.7% in the year to November 2015. In contrast, ONS’ figures indicate that average UK house prices rose by 7% in the year to October.
At present, the average UK house price is £290,000. The Liberal Democrats recently utilised ONS residential property value statistics to predict future price trends. The party has estimated that the average UK residential property will sell for £650,000 in ten years’ time, while today’s average house price will more than triple to £1.017 million in 16 years’ time.
Evidence suggests that average UK incomes won’t rise fast enough to meet the Liberal Democrats’ projected house price increases. “A child born [today]… faces the prospect of paying at least a million for a home to call their own,” Farron commented to The Telegraph.
Continuing, the Liberal Democrat leader said: “Relying on the Bank of Mum and Dad isn’t an option for everyone and adds pressure to millions of families who have worked hard and done the right thing. The continuing upward spiral of house prices threatens the very idea of a family home.”
Continually rising UK house prices have been driven by high demand for residential property. The government believes that the UK needs to construct 400,000 new residential units by 2030. They’ve made some progress but construction of new residential property still sits way below this target. The Town and Country Planning Association believes this target is too low, projecting that the UK needs to build a minimum of 240,000 every year by 2031 to meet current demand for residential property.
In a recent Parliamentary session, the Liberal Democrats called for Whitehall to initiate efforts to get young Britons on the property ladder. Specifically, Farron’s party said Whitehall needs to build “enough affordable homes for young people to rent and buy in the communities where they live.” Measures suggested include obligating councils to build more council houses and the creation of 10 more garden cities, including five in the South-East of England.
The Liberal Democrats’ suggestion that house prices could surpass £1 million by 2032 is based on house market price trends for the past three years. However, experts suggest that as residential property becomes more unaffordable, particularly in Greater London, demand could decline and spur UK house price growth into reverse.
Lancaster University’s UK Housing Market Observatory report found that London house prices are “very close to entering an exuberant phase.” Average residential property values in the UK capital are expanding by 2.75% every three months and the report suggested that if this rate of growth continues, the London housing bubble will burst in early 2017. “Historical evidence suggests that phases of exuberant house prices are often followed by a sudden crash,” the report added.