UK house prices are set to soar over the next 50 years while the average income won't keep pace, putting home ownership out of reach of millions.Professor David Miles, a former member of the Bank of England's monetary policy committee, says the shortage of housing and a restriction on the availability of land in the UK will mean house prices keep spiralling upwards for decades to come.Speaking at an event in Westminster this week, Miles revealed analysis showing that 'extraordinary' house price inflation over the past 30 years was likely to continue for the next 50 years.Miles: 'It's been an extraordinary period of rising house prices'Worse, he warned that median salaries in the UK were unlikely to keep pace with rocketing house prices, putting home ownership even further out of reach for aspiring buyers.
Below is a graph showing roughly the past 30 years of UK house prices, which I’ve compiled using data provided by Lloyds/Halifax. This means that on average people needed 4.5 times their salary in the late 1970s to buy a home while today, they need 7.3 times.
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House prices, according to the Nationwide, have risen 42-fold (from £4,700 in 1971 to £197,000 today), and by a lot more in London. You can view the House Prices Report for London over another date range or view the report for another location using the options at the bottom of the page. House prices rose 9.7% last year, says the Halifax.
House prices set to rise for the next 50 years and outstrip incomes even further, warns ex-Bank of England economist. Some links in this article may be affiliate links. The average loan-to-income multiple of a mortgage in London has hit a landmark four timesMiles said: 'It's not at all difficult to write down what I think is a plausible economic model that shows what we've seen over the past 30 to 40 years, of rising house prices relative to incomes, actually continues into the future. Prices had surged in the run-up to the 2015 election following initiatives from the Treasury and the Bank of England to boost activity.Despite a prolonged period of ultra-low interest rates, prices in London have been affected by a range of factors.
Since the Halifax began tracking historical UK house prices in 1983: House prices have risen nationally by 428%. We are no longer accepting comments on this article.How much tax would you have to pay on a home or buy-to-let?
We do not allow any commercial relationship to affect our editorial independence. London has shown a general slowdown in its annual growth rate since mid-2016.
'And he added: 'It's very difficult to work out whether rising house prices relative to incomes are just a bubble that has to reverse itself or is it simply a continuation of the equilibrium path that we are on which is almost inevitable if population and average incomes continue to rise? Housing Index in Canada averaged 68.27 points from 1981 until 2020, reaching an all time high of 104.30 points in June of 2020 and a record low of 37.70 points in May of 1983.
That helps us fund This Is Money, and keep it free to use. 'Making very slight changes to the availability of land, to substitute away from land footprint in favour of building up, can dramatically change the trajectory that house prices are likely to follow in relation to incomes.' London house prices fall at fastest rate in 10 years This article is more than 1 year old It is the biggest plunge since the 7.0% annual drop recorded in August 2009, says ONS
'The big question is can we expect the next 40 to 50 years to look like the last 30 to 40: house prices rising for a sustained period into the future?
These prices have been adjusted for inflation, they are the initial prices at which buyers purchased their properties.
I think it not implausible that this might be true. Lobbyists have suggested that builders must embrace modern methods of construction if they are to deliver anything like enough new homes to meet growing demand. Whichever way you cut it, it's been an extraordinary period of rising house prices.
Published: 04:06 …
This graph illustrates actual house prices in the UK since 1975. The latest figures from the Council of Mortgage Lenders show that the average loan-to-income multiple of a mortgage in London has now hit a landmark four times – a record high. If you click on them we may earn a small commission. The conclusion, he suggested, was to build 'up'. But Miles warned that to keep a lid on future house prices, construction would also have to address the lack of available land to build on in the right places. 'Government is due to publish a housing white paper later this month, laying out its plans to build more homes and ease the UK's housing supply shortage.
He said: 'UK house prices have not just gone up relative to the price of things we buy but also relative to incomes.
By Sarah Davidson For Thisismoney.co.uk.
London house prices are up by 559%.
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