House Prices And Rents Set To Rise As Home Ownership Falls

By Julian Stone
The National Housing Federation (NHF) is forecasting that home ownership will fall to 1980′s levels, forcing house prices and rents upwards by as much as 20% during the next five years.

 There is good and bad news for the house market as the NHF predicts a dramatic fall in the number of people who can afford to own their own home. It is predicted that only 63% of adults will be home owners by 2021, whereas 67.3% currently own their home.
It is a reduction in the number of new homes being built that will cause the housing shortage as house building has slumped to the lowest levels for 90 years.
Whilst demand will outstrip supply, forcing house prices and rents upwards, possibly by as much as 20 percent, this will make it harder for young people to save enough money for a deposit, forcing them to remain tenants for longer.
According to the Council For Mortgage Lenders, first time buyers currently have to provide an average deposit of 20 percent, however as rents rise, it becomes harder for them to save sufficient funds to get a toe hold on the property ladder.
Those who do own property, however, will benefit from rises in the value of their homes as well as better rental yields, however it is the older generation and affluent youngsters who will be the beneficiaries, as David Orr, chief executive of the NHF explains:
“Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy.”
MoneyHighStreet.com Comments: If these predictions from the NHF prove to be true then now would be the time to buying into the the faltering property market as home owners and landlords would then be well placed to benefit from the home shortages in the next few years.
The problem, of course, is that mortgages are still difficult to secure, and the reluctance of banks to lend may be hitting the builders’ too, making it more difficult for them to finance new housing developments.
Trying to gain that vital first rung on the property ladder as soon as possible may be more important as rents are likely to keep rising, yet mortgage rates are at record lows. In fact the Halifax is reporting that for first time buyers it is now £100 a month cheaper to buy than rent.