A senior economist has predicted a gloomy outlook for the future of owner occupation in the UK.
Richard Snook, economist at business consultancy PwC, suggests that owner occupation in Britain will drop from its current position of 68% of homes to just 60% in the next decade.
‘We project that the proportion of owner occupiers, with or without a mortgage, will decline from its peak of around 70% in the mid-2000’s to only around 60% in 2025,’ said Snook. ‘The long rise in the UK owner occupation rate in the post-war years seems to have gone into reverse.’
More positively, PwC suggests that a record number of people will be able to own their homes outright with no mortgage debt, by 2025. The business consultancy states that 8.4m houses are owned outright at present but forecasts that in ten years time, this will rise to £10.6m households, the equivalent of 35% of homes.
The recent PwC report says, ‘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.’
Owner-occupation to drop in next decade?
Lack of supply
Data from the report also shows that the total number of households owning a home with a mortgage dipped from 10million in 2001 to just 8million last year. PwC suggest that this will dip further to under 7.2million in the next ten years, with limited supply and mortgage availability the prime factors.
In addition, the consultancy believes that the housing supply will persist for at least the next decade. This in turn is expected to see the number of households privately renting increase to 25% of all homes by 2025.
Chronic lack of property supply had led to the firm to suggest that medium-term house price growth is expected to average just 5% per year in the next five years. If this forecast is correct, the average residential property in the UK could be worth £360,000 by 2020.