House prices seem high enough today to anyone who is in the middle of applying for mortgages or planning removals, but if the current rising trend continues, future generations of property buyers could be paying millions for their first homes.
The value of the average home has increased annual by 8.6% over the last 60 years. Anyone who has lived through this rise will have seen homeownership become increasingly hard to afford for their children and grandchildren. Some of those who made their first removals into their own homes decades ago may even have had to help out some of their younger family members by contributing to their deposits. Many young first time buyers today depend on financial assistance from their parents in order to get onto the property ladder.
A similar pattern could play out over the coming decades, if house prices continue to rise in the same way. According to the internet estate agency eMoov, future generations of first time buyers are likely to be paying millions for their first homes. It is therefore likely that young buyers in the future are likely to continue needing support from their families before they can start planning removals into their own homes for the first time.
If prices continue rising at a similar rate, a child who is born today could be expected to pay over £3.3 million for their first home. This is the price that the average family home, currently worth about £200,000, will have reached by the time that a baby born in 2014 will be planning to buy at age 35. Older children, who might be buying a little sooner, will also be facing much higher property prices than their parents. A ten year old might need to come up with £1.6 million for their first property purchase.
Looking at property price changes over the course of decades, rather than months or years, shows how much more each generation of buyers has to pay for their homes than their parents and grandparents. In just a few decades, if house prices continue to rise as they have done in the past, young buyers could be trying to find deposits that are higher than the total cost of their childhood homes.