Property millionaires to triple by 2030 - as prices double
In just 14 years, one in four homes in London will be worth at least £1 million - as property prices double, and the number of property millionaires in the country triples. But what does it mean for you?
A study for Santander Mortgages found that by 2030, 1.6 million homes in Britain will be worth at least £1 million (up from less than half a million today), and the average property price will surge to more than half a million pounds.
The figures have been put together by LSE Professor of Economic Geography Paul Cheshire, who says overall, the average UK property price (which currently stands at £283,565) is expected to increase 23% by 2020 to £349,300. Then by 2030, the average UK property price will have almost doubled, surpassing the half a million pound mark at £557,444.
As ever, the overall figures mask even more dramatic changes in some parts of the country. London will be overwhelmingly overpriced - with 25% of properties costing more than £1 million by 2030. In some boroughs things are even more shocking - with two boroughs seeing 70% of all properties worth more than £1 million, and three boroughs seeing 50% over this mark.
The next biggest concentration of property millionaires is in the South East, where 7% are worth more than £1 million, followed by the East of England at 4%. Meanwhile, in vast swathes of the country, less than 1% of property will be worth over £1 million - including the North West, Yorkshire and the Humber, Scotland, the East Midlands, Wales, the North East and Northern Ireland.
What does it mean?
If you own a property, and only ever expect to move down the ladder, then this is good news, because you can expect to get more from any potential downsize - although in turn you will have to pay more for a smaller property.
However, for anyone yet to buy - or planning to move up the ladder - this could cause real problems. It's not just a question of rising prices, because buyers also have to deal with the fact that incomes will not keep pace with prices. At the moment the average property is already 7.9 times more expensive than the average income, but by 2013, the UK average will be an eye-watering 9.7 times. In London things will be even worse, where the average property will rise from 11.5 times income to 16.5 times.
Miguel Sard, Managing Director of Mortgages, Santander UK, said: "Property price inflation will tip many existing home owners into the million pound price bracket but could also price some aspiring buyers out of the market if they don't have the right support." He recommends working out how you can afford a sensible and affordable home as soon as you can, so you can find a place on the property ladder without over-stretching yourself.
Professor Cheshire adds: "By 2030 the divide between housing haves at the top and the have-nots at the bottom will be even wider than it is now. More owners will enjoy millionaire status, as homes that many would consider modest fetch seven figure prices in the most sought-after areas. Property price inflation is beneficial for existing owners who will see their net-wealth increase, but it will make entering the market more difficult still for new buyers, further highlighting the importance of the right timing, advice, support and financial planning; and not just having a mum and dad who bought a house but a grandparent too."