The number of properties in Britain worth £1m or more is set to more than triple by 2030, widening the gap between the housing haves and have-nots, according to a report.
Less than half a million homes in the UK are currently valued at £1m-plus, but a study by high street lender Santander claims this number will rise to more than 1.6m in the next 15 years.
The report also warns that affordability will worsen considerably by the end of the next decade as house price rises far outstrip growth in household incomes. The average property price amounts to 7.9 times the average income at present, but by 2030 this is expected to hit a multiple of 9.7.
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Santander said: “By 2030 the UK will be even more starkly divided into the housing wealthy and the housing poor than it is now.”
There is a stark geographical divide among the projected members of the £1m club, according to Santander. One in four homes in London will cost £1m-plus by 2030, rising to 70% in two boroughs in the capital – Kensington and Chelsea and the City of Westminster. More than half of homes in three more London boroughs – Camden, the City of London and Hammersmith and Fulham – will also be worth more than £1m. Across the south-east, 7% of homes are expected to be valued at that level.
However, many areas of the UK – the north-east, north-west, Yorkshire and Humber, Scotland and the East Midlands – are expected to host a negligible number of such expensive houses (less than 1%). One area, Torfaen in Wales, home to more than 90,000 people, will have none.
Properties valued at £1m or above Table: Properties valued at £1m or more. Source: SantanderThe report, carried out in partnership with Paul Cheshire, professor of economic geography at the London School of Economics, predicts that prices in London, which are currently 11.5 times average incomes, will soar to a multiple of 16.5 by 2030.
Cheshire said: “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 sought-after areas.
“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.”
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The average property price in the UK, currently £283,565, is expected to double by 2030, breaking through the £500,000 mark to £557,444.
For the poorest 25% of households, affordability is expected to get worse in all regions. The price of a house at the bottom of the price chart will be 17 times the income of a person earning the lowest quartile wage in London by 2030. Those hoping to buy will need to head to Northern Ireland, which is set to remain the most affordable region.
Despite government initiatives such as the help to buy scheme, steep housing costs have locked many out of the property market, especially in London, where almost one in 10 teachers are still living with their parents after five years in the profession. Young people are among the worst hit. The Resolution Foundation thinktank has warned that the under-35s are becoming permanent renters, with home ownership reserved for the well-off and elderly.
The Santander report notes that the cost of borrowing is still at record lows and argues that despite tough conditions, “with the right support” those who want to get on the property ladder can do so.
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