There will be long term pressure on housing affordability and the private rental sector if demographic forecasts from a range of bodies turn into reality.
A development finance firm – Hank Zarihs Associates – has collated figures from a range of bodies looking at likely population growth, housing supply and pricing trends.
It says that the latest UK Census has forecast a seven per cent growth in the UK’s population to some 60 million by 2045 – just over two decades from now.
Meanwhile housebuilding targets – set to need just the current population of the UK – is falling short with the National House Building Council’s latest quarterly statistics showing a year-on-year drop of 53 per cent in new registrations with completions down by 15 per cent. Last financial year just 234,000 new homes were built, down by six per cent on figures for 2019-20 and below the government’s much-debated 300,000 new homes a year target.
Office of National Statistics data shows that the cost of a home is increasingly more quickly than earnings.
In 2002 the average house price in England was £102,000 and the average salary was £20,739. However, in 2022 – the latest official data available – this climbed to £275,000 with the average salary rising to £33,208. London was the least affordable place to live with the average house price more than trebling to £525,000 in 2022 compared with an average house price of £174,000 back in 2002.
The ONS says this means affordability ratios increasing from 4.92 in 2002 to 8.28 in 2022.
The Hank Zarihs pull-together of these figures comes as the Royal Institution of Chartered Surveyors – in a separate report – shows that immediate tenant demand grew even in December, when traditionally the market slows.
“With landlord instructions remaining scarce, having declined continuously over the past year, a lack of properties available on the lettings market continues to underpin rental prices” says the latest RICS market snapshot.
“Consequently, a net balance of 50 per cent of [lettings agent] respondents expect rents to continue to rise over the near-term, with longer term projections now pointing to a near four per cent increase over the year ahead and for rental growth to average five per cent per annum over the next five years.”
