Owner occupation in Britain will plummet from its current level of about 68 per cent of homes to around 60 per cent in just 10 years.
That is the prediction of Richard Snook, senior economist at respected business consultancy PwC.“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” he says. However, record numbers of people will own their homes outright, with no mortgage debt, by 2025.
PwC says that today some 8.4m homes are owned outright but in 10 years time that will be 10.6m households, equivalent to some 35 per cent of all homes. “A key driver is the rising proportion of over 60 year olds in the UK, who are far more likely to have paid off their mortgages” says a PwC report.
The number of households who own their home with a mortgage fell from around 10m in 2001 to only around 8m last year. This is projected to decline further to just under 7.2m by 2025 as limited housing supply and mortgage availability make it harder for first time buyers to get on the housing ladder.
The consultancy also says that housing supply shortages will persist for at least the next decade and that the numbers of households privately renting will rise, reaching 25 per cent of all households by 2025. In the immediate term, PwC says house price growth has moderated since last summer, particularly in London. But persistent lack of supply means that medium-term house price growth is projected to average just over 5.0 per cent per annum over the period to 2020. This implies that the average residential property in the UK could be worth around £279,000 in 2015, rising to around £360,000 by 2020.