Average home in London to reach £1m by 2030
15/05/2015
It has been predicted that the average house price in London will reach £1m by 2030, according to research by Oxford Economics.
The research suggested that house prices will continue to rapidly increase as a result of strong jobs growth, a growing population and a severe housing shortage.
There are currently around 8.5m people living in London, but this could increase to around 11m in the next decade, according the research.
These projections are in stark contrast to forecasts by the Mayor of London’s office, which has previously suggested that the population will reach 10m by 2036. Analysts at Oxford Economics have claimed that this discrepancy in projections is because the Mayor of London’s figures are relying on assumptions that do not take into account rapid employment growth, which has been achieved over the last two years.
Oxford Economics have therefore forecast a much faster employment growth in the city over the next two decades. Analysts have said that if these employment projections were correct, then the housing shortage would drive average house prices in London towards the £1m figure by 2030.
Warnings
The analysts at Oxford Economics also warned of the effects of house prices continuing to outpace earnings growth.
They said that if house prices continued to increase at a faster rate than wages did, then the average house prices in London could actually exceed £1m before 2030.
Richard Holt, head of global cities research at Oxford Economics said that such an increase in housing costs could mean that a generation of Britons could miss out on ever owning their own home.
Mr Holt continued to say:
"If everybody’s pay rises at the same rate, that may not be too much of a problem. But if pay at the top end rises much faster than for people on low wages, then the affordability challenge will just get worse",
The report also outlined a similar warning about the effect of a growing gap between high and low incomes by stating that “an increasing divergence between those with high and low incomes” would create even more affordability issues.
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
RICS house price index under pressure
The prominent Royal Institute of Chartered Surveyors (RICS) house price index fell to -36 in the three months to September from -32 in the three months to August. This fall in the index reflects the fall in house prices in England and Wales and is the largest one-month fall since May 2009. While the drop is effectively blamed upon sellers rushing to the market to sell before further perceived weak...
Read MoreNationwide home survey shows first rise in over 12 months
The Nationwide housing survey has confirmed the first annual rise in UK home prices for 19 months. In the 12 months to October 2009 the price of the average home in the UK increased by 2% although the rate of increase has slowed from 1.4% in August and 0.9% in September to just 0.4% in October. While there may be a number of factors to explain the reduction in the rate of increase, the very fact t...
Read MoreUK house prices under pressure
The Royal Institute of Chartered Surveyors has today revealed pressure on UK house prices as more and more people look to dispose of their properties ahead of the election. This is something of a surprise as many people had initially assumed homebuyers and sellers would hold off until the election was over but it appears that there is pressure as more properties come onto the market. The report...
Read MoreHouse prices rise in March
The monthly Nationwide property report shows that UK house prices rose by 0.7% in March to hit an average of £164,519. This takes UK house prices back to the levels seen in January after the fall of 0.8% in February, which spooked many people and led to concerns about the short to medium term direction of the UK property market. So does this increase in March mean the end of any potential downtur...
Read MoreAnother day another positive note for the UK property sector
Yesterday's news from Bovis Homes was well received by the UK stock market amid signs that the UK housing sector is starting to stabilise. However, while many analysts were upbeat about the sector as a whole there were a number who were cautious about calling the bottom although after the results from Persimmon, one of the more prominent UK housebuilders, perhaps everybody will feel a little more...
Read More