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Average house price in England could reach £1million within two decades

Average house price in England could reach £1million within two decades

A report compiled by charity Shelter and KPMG warns that unless action is taken, within two decades the average house price in England will be nearly £1million.

Photograph – N Chadwick

This means that more than half of all young people aged 20 to 34 will have to live with their parents by 2040, having been priced out of the housing market.

The research revealed the unless more is done to deal with the housing shortage, property prices could quadruple from their current average of around £225,000. A typical home could cost £446,000 in 2024 and balloon to £903,000 ten years later.

Marianne Fallon, KPMG’s UK head of corporate affairs, called England’s housing situation “a big and messy problem. For many people, particularly those in their twenties, the aspiration of owning their own ‘castle’ is fast becoming a fairy tale.”

The astronomical cost of buying a property discourages young people from living and working in London, which can hurt the ability of London companies to attract and retain talent.

Spencer Dale, chief economist at the Bank of England, also stated his concern about rising property values.

Titled Building the Homes We Need, the Shelter report presents a programme that it anticipates will help the next government improve the housing shortage. It recommends raising house building levels to 250,000 a year by 2021, a goal that meets the anticipated growth in demand.

To finance affordable house building, Shelter recommends the creation of a new ‘national housing investment bank’ that would offer long term and low cost loans for housing providers. The bank could also offer special savings accounts to raise capital from retail deposits.

As the housing market’s recovery quickens, experts point out that an imbalance between the number of available properties and the number of would-be buyers are driving prices up.

The Shelter report said that despite support schemes from the government, the housing market is skewed more and more towards people who are financially dependent on their parents. In 2011 only one-third of all first-time buyers got on the property ladder without added financial help.

The report recommends empowering local authorities to create specially designated ‘new home zones’, which could result in over 8,000 new homes a year. A plot of land would be sold off at a cheaper price to a developer who will use it to build affordable homes. Developments could be expedited by charging council tax on homes that have not been built during a reasonable time frame for their construction.

The report also suggested that more garden cities should be built in popular areas, and that the next government should propose sites for five new garden cities totalling around 30,000 homes. More should also be done to assist smaller builders back into the market by using government assistance to improve financing access.

Shelter chief executive Campbell Robb said that the chronic housing shortage is going to force the next generation to live in their childhood bedrooms. He said that the report proves that the next government can fix the housing shortage issue within a single parliament.

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