Benham and Reeves, the London lettings agency, has released figures which indirectly demonstrate why continuing to invest in buy to let property remains a safe and rewarding investment for the longer term.
By investigating historic data of first time buyer prices obtained from the Land Registry, which looked at figures from both the UK and the boroughs of London specifically, it suggests that the future prices for property will reach eye-watering levels if the following three decades reflect the pattern experienced since the 1980s.
The letting agency explained that the average first time home buyer today is aged 34, and buys a property in England which costs £207,526.
However, assuming a baby born in 2019 becomes a first time home buyer in the year 2053, when they are 34 years of age, the average price of a home would reach £1,214,381, with affordability becoming an even worse situation for people wanting to buy. This figure, however, pales in comparison to the prices which will be experienced in London.
While the average house price in London for first time buyers is approximately £412,679 currently, this could potentially increase to a colossal £4.5m over the course of the next 34 years, if the figures are to be believed.
A perfect example of the sheer scale of the divide between the North and South, the cheapest region for first time buyers born this year would be within the North East. This area is expected to reach an estimated price of £210,739 in around 34 years, which does not even double the current average first time buyer price of £110,645 for the area.
Director at Benham and Reeves, Marc von Grundherr, explained that the research has considered both the ups and downs experienced historically in the first time buyer market, and analysed how the market could change for the generation of possible first time home buyers being born this year. This would occur if the trends over the past few decades were to repeat again in the decades to come.
However, it is impossible to predict what future trends the property market in the UK will follow, particularly when considering the current turbulence which has been caused by wider political and economic factors. This research, however, comes as a potential warning of what could take place if the country continues to fail in its efforts to deliver affordable starter homes.
Not only does the research highlight a huge jump in property prices during the past few decades, but it also draws attention to how the situation could become even worse in the years to come.
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