Posted on: 17-04-2018 in Mortgage & Property
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?
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.
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.
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.
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.