One In 20 UK Homes 'Worth £1m By 2030'

More than 5% of UK homes will be worth at least £1m and even the average house price will be 10 times the average worker's salary by 2030, a new report has found.

The analysis, compiled by a professor at the London School of Economics (LSE) for Santander Mortgages, predicts the gap between the housing "haves" who already own large homes, and the "have nots" struggling to get their foot on the housing ladder, will widen.

The report also finds that prospective home owners will increasingly need to make compromises such as moving further away from friends and family, accepting far greater commuting times, or making do with smaller houses.

An average UK home which costs £280,000 today is expected to be worth £344,000 in five years' time and will have nearly doubled in price to £557,444 by 2030.

The deterioration in housing affordability will mean the average UK property will be priced at nearly 10 times the average income by 2030, the report predicts. The current ratio is 7.9 times.

The situation is more stark in London, where one in every four properties is expected to be worth more than £1m by 2030.

Paul Cheshire, LSE professor of economic geography and the author of the report, said: "More owners will enjoy millionaire status, as homes that many would consider modest fetch seven figure prices in the most sought-after areas.

"Property price inflation is beneficial for existing owners who will see their net wealth increase, but it will make entering the market more difficult still for new buyers."

Reflecting on the findings Savills (Other OTC: SVLPF - news) ' head of residential research, Lucian Cook said: "Our research shows that those who have paid off the mortgage on their main home now have almost twice the amount of housing wealth as a declining number of mortgaged owner occupiers (Other OTC: UBGXF - news) ."