Buying a house is becoming increasingly difficult for those reaching an age where owning a home is the next step. Private renting is sometimes the only option as house prices rise faster than wages. Is this now the norm, or is there hope in the future?
The number of homeowners in London has dipped below the number privately renting for the first time in a decade, raising concerns that future generations will be permanently priced out and that London will soon transform into a city of renters.
With the average cost of renting a property in London hitting £1,500 per month, Londoners are going outside the city, causing a ripple effect in the prices. Rental prices are slightly cheaper in the surrounding London boroughs but you will need to look further afield to get reasonable rates for good-sized accommodation.
Houses to rent in Gloucester from agents such as http://www.tgres.co.uk/properties-to-let are much more cost efficient, with two-bedroom houses on the market for £750pcm; meanwhile, you could be enjoying a four-bedroom detached house for the same price as a London flat.
No end in sight
As the cost of renting increases, so does the cost of buying, with many prospective buyers unable to afford to buy on the wages they earn. According to the Telegraph, there is no end in sight for the current ‘Generation Rent’.
If the current market continues, first-time buyers will need to earn approximately £64,000 per year by 2020 to be able to afford their own home – currently the amount required is £52,000. The average first-time buyer price in the UK is £220,000; however, this rises to £419,000 in London, with the South East hitting £257,000. In contrast, the average is between £122,000 and £155,000 in the north of the country.
The average UK price is expected to rise to £270,000 by 2020, with London peaking at £558,000, the South East at £316,000, and the north averaging between £142,000 and £183,000.
While the government has tried to put in place measures to halt the increases, such as changing taxes to discourage buy-to-let mortgages and the introduction of incentives to help prospective home owners, there does not seem to be any change in sight, making it a bleak future for the generations to come.