Inheritance bills to grow as house prices rise
06/08/2007
The average house price will rise by 40% over the next five years to reach £302,400, according to new research conducted by independent economists and published by social housing pressure group the National Housing Federation (NHF).
The research paper called "Home Truths" also reveals that a housing market crash is ‘unlikely’ despite the fact that home ownership will move even further out of the reach of many first time buyers.
It will also bring ever more people into the maw of IHT - which currently cuts in at 40% from £285,000, although this is adjusted upwards each year. The last two rises have been of £10,000 and £12,000 - significantly less than the rise in property values.
According to the report, the average house price is now nearly 11 times average earnings, housing supply has dropped even further behind housing demand, and over 1.6m households (which equates to almost 4m people) are on waiting lists for a social home.
The Federation says that the Government's green paper published on Monday 23rd July, in which it announced plans to build three million homes by 2020, has to be turned into reality, with the release of necessary funds to invest in social housing.
NHF Chief Executive David Orr said: “Our projections show that house prices will break the £300,000 barrier by 2012. Home owners may see this as good news, but it carries a sting in the tail.
"A growing number of parents will find themselves subsidising their sons’ and daughters’ mortgages. And, across the country, more and more people are going to find themselves priced out of the property market, and struggling to find a decent home.
"However, housing associations, which build the vast majority of new social homes, are ready to play their part in meeting this challenge. While Gordon Brown’s pronouncements on house-building indicate a clear step in the right direction, it is imperative that ministers turn their words into deeds - and deliver on their promises.
“For those key workers and low-income families looking for a decent home, it is critical that ministers invest sufficiently in social housing. This will enable housing associations, and others, to build the desperately needed 70,000 new social homes a year.”
As well as showing the average house price breaking the £300,000 barrier, the report, which was researched by Oxford Economics, shows that by 2012:
• in London, the average house price will be £478,300 (compared to £318,864 now)
• in the South East, the average house price will be £392,900 (compared to £247,762 now), and
• in the East, the average house price will be £340,200 (compared to £211,880 now)
The paper, which also shows how housing associations are responding to the housing crisis, says that:
• the average house price in England last year was £206,594, nearly 11 times average earnings, following property inflation of 7.5%
• house prices have risen by 156% since Labour came to power in 1997; during the same period incomes have gone up by 35%
• in two areas, Kensington & Chelsea and South Buckinghamshire, house prices are now more than 20 times local average incomes
• in only seven areas across England do the cheapest homes cost less than four times average local earnings (broadly what a mortgage lender will now lend): Barrow, Burnley, Hartlepool, Kingston-upon-Hull, Pendle, Stoke on Trent and Wansbeck
• mortgage repossessions rose 65% last year to 17,000 homes, and
• social housing waiting lists have grown by 57% over the last five years to 1.6 million households – the Federation calculates this is around four million people.