The cost of living in the UK is on a steep ascent with no clear end in sight. Young people will feel the impact of soaring prices the most. According to a new pwc report, only 26% of 20-39 year olds will be homeowners in 2025.
House prices – already at record highs – will rise in the UK by twenty-five percent over the next five years.
Last week, the Bank of England’s chief economist Andy Haldane described the UK housing market as “broken,” blaming the squeeze on a depressing lack of new building projects. "There is a chronic and accumulated imbalance between demand and supply, and it is that which is sending skyward – and has sent skyward - house prices," he said at Britain’s Trades Union Congress.
To meet the demand, parliament has pledged to build 200,000 new homes a year, taking up the recommended course of action made by Haldane. As of now, the UK falls short of that figure by fifty percent. Without speedy government action, the crisis will only become more acute, particularly for first-time buyers.
If the current trend continues, the combined effects of high prices, limited stock, and low earnings for young people will shut most of them out of the buyer’s club. What’s more, the supply of social housing remains constrained, meaning there may not be an adequate safety net in place for this vulnerable demographic.
Not surprisingly, this issue is most keenly felt in the south of England, especially in London. Ironically, this is also where we see the highest property churn, keeping removal companies such as Movago busy.
Relocation to other parts of the country remains a feasible option for young people in markets where it’s still possible to gain a foothold. Cites such as Manchester, Leeds, Bristol, and Edinburgh will show tremendous growth in the next five years, according to the JLL property group. But until dramatic price increases hit these urban centres, they could offer a more realistic foothold into the real estate market for a young generation of home owners.