UK Housing Market looking better than ever

New figures released in leading UK estate agent Savills’ annual report reveal that the value of the UK housing stock has reached an all time high of £7.14 trillion.

With so much of the nation’s wealth tied up in housing, we take a look at what this means for you, and answer some basic questions. Who owns the property wealth in the UK?  What does this mean for families, landlords, investors? Where are the good returns? What is the outlook for the UK property market?

Who holds the wealth?

New research has shown that the over 50s now hold a whopping 75% of the UKs housing wealth, a total of £2.8 trillion. In sharp contrast, the under 35s account for just 6% of the UKs housing equity, signalling a striking generational divide in the nation’s property wealth. While the figures show the extent of the gap in ownership of wealth, they are not news for the millions of under 35s struggling to get a mortgage.  A government survey recently revealed that over 4.7 million households (20 per cent) now privately rent – a figure that has more than doubled from 20 years ago.

What affects growth in the UK housing market?

There are two major factors that determine the growth in value of UK housing. They may seem pretty obvious.  The first is that value is affected by the fluctuation of house prices.  The second is that it increases as new homes are built. Savill’s recent report now indicates for the first time how much each factor contributes to the overall growth of property value.  Between 2007 and 2017 housing value in the UK grew by £1.82 trillion.  81% of this growth was down to house price inflation, while 19% came from building new homes.  Such development adds value year on year and is good news for the housing market: 2017 saw a boost of £62 billion from the new build sector, more growth than in the past ten years.

What’s the outlook for the UK housing market 2018?

While the outlook for growth reflects a more widespread slowing (the predicted inflation rate is about half that of the last five years) the general picture is one of optimism.  With the value of housing added by new house building set to continue, we could actually see some more affordable housing come on to the market, which could prove a game-changer for the under 35s.  Coupled with the availability of good mortgage deals for hopeful owners as well as private landlords, the news looks positive for the younger generation and investors. Speak to your IFA today to see what mortgage deals are available for you.

5 top facts about the UK housing market

  • UK housing stock is worth £7.14 trillion – but what else could that buy you?  Well, if we pooled our resources, collectively the nation could purchase Google, the International space station, all the oil left in the North Sea, Amazon, Apple, Coca-Cola, McDonalds, all companies on the FTSE100 and FTSE250, the top 15 mortgage lenders and the English Premier League.  Not bad!
  • London and the South East account for 44% of the homes in the UK, but a whopping 64% of the value.
  • Property vs Shares: in the last ten years London house prices have increased by 75.3%, outperforming the FTSE100 by 59%.
  • In 2007, the three best performing districts were all in London. In 2017 first place went to Edinburgh, with Birmingham in 2nd and Barnet in 3rd.
  • In 2016, private landlords owned more housing equity than mortgaged owner-occupiers for the first time since data has been collected (£1.27 trillion vs £1.21 trillion).

Top Tip

While London and the South still hold the lion’s share of the nation’s property wealth, the North of England looks set to shift the pattern of value growth over the next few years. Keep an eye on vibrant cities like Manchester, Birmingham and Leeds that are attracting the attention of investors and developers.

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