A prominent property boss believes North East first time-buyers will need to save deposits of £45,000 within the next 10 years if they want to get a first foot on the property ladder.
Research commissioned earlier this year by North East-based sales and lettings business KIS predicted that the typical North East house will cost £187,000 by 2020; £230,000 by 2025; and £278,000 by 2030.
Assuming a standard deposit of 20%, this would mean buyers having to find down-payments of:
- £37,400 by 2020
- £46,000 by 2025
- £55,000 by 2030
The figures comes as research by accountants PwC predicts that more than half of 20 to 39-year-olds will be renting property from private landlords rather than living in their own homes by 2025.
PwC’s analysis predicts that total UK owner occupation will slump to 60% by 2025, a fall of 10% since the start of the financial crisis.
The population of households in private rented accommodation meanwhile – which has already more than doubled since 2001 – is expected to rise from 5.4m to 7.2m.
This trend is predicted to be particularly strong amongst the 20-39 age group where more than half of people are set to rent privately by 2025.
Official figures show that Britain’s inflation rate rose in July, leading to further debate over when Bank of England will start raising interest rates – further pushing up the cost of purchasing a property.
The consumer price index measure of inflation rose to 0.1% in July from zero the previous month. Figures from the Office of National Statistics showed annual UK house price inflation rising at the same rate to 5.7% in the year to June.
Property expert Ajay Jagota of sales and lettings firm KIS responded to the figures:
The property firm is famous for being the first letting agents in the UK to abolish deposits, replacing them with a one-of-a-kind landlord insurance policy offering guaranteed rent, deposit replacement, legal assistance and round the clock third party emergency home repairs.
Ajay said:
“These figures might look ominous, but it’s important to remember that the North East is and is likely to remain the most cost-effective place in the country to live for renters and buyers alike.
“Not only do our projections show that North East homes will still be half as expensive as London ones in ten years time, many Londoners are now paying more than half their wages in rent. In the North East the figure is something like 28%.
“A lot of the comment on these figures has concluded that more people are renting because they can’t afford to buy. While there is of course more than an element of truth in that, what often goes overlooked it a more profound cultural change which is seeing more and more people choosing to rent, something completely commonplace on the continent.
“When letting agents like KIS are abolishing deposits altogether it’s easy to see why renting is an increasingly attractive option for many.
“It’s important to remember though that despite these trends and coming interest rate rises PwC are still predicting that record numbers of people will be owning their own home outright in a decade. 10.6m compared to 8.4 million today.
“The private rented sector will grow and grow in the next ten years – but this is far from the same thing as the death of owner-occupation”.