10th
Aug 2015
An accountancy firm believes that by 2025, more than 50% of adults under 40 years of age will be privately renting their home.
The predictions have been made due to increasing house prices that the market is experiencing, and forecast a 5% increase year on year for the next five years. As widely reported people are finding that they are being priced out of getting onto the bottom rung of the housing ladder. The company predicts that by 2020 the average house price will be £360,000.
At this moment, one in five households are renting their homes and it is probably going to rise to one in four households by 2025 – approximately 7.2 million households.
During 2013/14 the age group 24 – 35 years old, just under half (48%) were renting which was an increase of 3% from the previous twelve months.
Economists are hedging their bets by predicting that by 2025 more than half of Under 40s will be renting, as it’s a certainty that they will be. What will be hard to quantify is how high the figure will be.
Richard Snook, a senior economist at the firm, said: “Driven by a decade of soaring house prices pre-crisis, and lower loan-to-value ratios post-crisis, the deposits needed by first time buyers have risen significantly. As a result, a generation of private renters has emerged and this will increasingly be the norm for the 20-39 age group. There is also a rising dichotomy in the market between those (mostly older) households who own outright and those (mostly younger) households who still have a mortgage or rent to pay.”
“Overall, we project that the proportion of owner occupiers, with or without a mortgage, will decline from its peak of around 70% in the mid-2000s to only around 60% in 2025. The long rise in the UK owner occupation rate in the post-war years seems to have gone into reverse.”
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