According to the National Housing Federation econometric forecasts, the average house price in England will rise by more than 50% over the next 6 years [Guardian]. Thats good news for sellers and bad news for buyers since the average house would 9.5 times the projected average salary.
The findings were based on an analysis by Oxford Economic Forecasting, an independent group whose housing market model is being used by the government to work out the policy implications
The buy-to-let (investor) purchases seemed to drive sales activity in the market and make the government more complacent about providing new affordable housing. Therefore, the purpose of the report seems to be to get the government to build more affordable housing. The results according to some appear to be optomistic even if current economic conditions do not deteriorate.
Here’s a few facts on the English Housing Market (that are strikingly similar to the US):
- House prices in England rose 6% last year – three times CPI inflation
- Average house prices have risen by 139% since Labour came to power in 1997. Earnings have risen by 24%
- First-time buyers accounted for 30% of home purchases in 2005, compared with 50% in 1995
- 115,352 mortgage repossession proceedings were issued in 2005, a jump of 48% on 2004
- The number of households waiting for a suitable affordable home on housing registers is now more than 1.5m – a rise of nearly 50% since 2000
With affordability waning and housing costs rising, its not clear how the econometrics were calculated. This group also found that there was no housing bubble in England [pdf] in a report issued last spring. The forecast was made in a recent presentation [Powerpoint]. The actual report is not available online.