A recent BBC News article has claimed that house prices could rise by up to 50% in the next 10 years. The news came from findings in a report published by the National Association of Estate Agents and the Association of Residential Letting Agents, who suggested that the recent trends in house prices UK-wide, are set to continue for another decade. But, is this actually the case, and if so, what does this mean for the housing market?
Looking back at previous trends
If we look back at the previous ten years, there has been a huge increase in the value of house prices. With economic forecasts over the next decade looking very similar to the previous, it would make sense that the current trends in the property market would continue. As tighter lending restrictions, low wage inflation and a shortage of affordable housing, also continue. Moreover, the average cost of a home is expected to soar by 50% by 2025 from £280,000 to £419,000 which is startling news for those yet to get on to the property ladder.
Mark Hayward, managing director of NAEA said: "House prices are only going to go one way, and unfortunately that is up.”
This predicted increase could also result in a property market that is inaccessible to those looking to buy their first home. But also, it could outprice many of those on low incomes, leading to an increase in the number of people preferring to rent.
Why is this the case?
The ongoing UK housing situation is a result of such a high demand for homes and the lack of affordable housing. The predicted rise is most alarming for first time buyers who are already struggling to get on to the property ladder, without the extra pressure of a further price hike.
This has led to an increase in the number of young people renting for longer periods, and with the recent Stamp Duty changes for landlords, it’s possible the cost to rent could also follow suit; causing a similar situation to potentially occur in the renting property market.
So why is now the best time to buy a property?
There are many reasons to suggest that now is the best time to buy a property. If house prices do continue to rise by 50%, buying a house now is potentially a great investment and could be very profitable in the long run – especially in already expensive areas like London. Equally, purchasing a house in an area which is up and coming, or which turns out to be a popular development in the future, is a venture that could really pay off.
It’s important to remember though that such predictions are based on previous trends in the property market, making forecasts isn’t an exact science. It’s also important to remember that prices will also differ depending on the area. London house prices are continuing to rise and show no signs of slowing down; so if you’re thinking of buying a new pad in the capital it’s probably the best time to do it now.
Although the future of the housing market looks uncertain, in the long-term if you’re planning to buy a new home, it does look like now is the best time to seize the opportunity while it’s more affordable. In turn, it could mean you get the most for your money and make the best investment.
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