Yahoo Finance Why the UK property market is causing a tornado of pain for Brits
Britons are increasingly finding themselves in an impossible situation when it comes to the housing market.
Rental prices are set to rocket over the next few years while getting on the housing ladder is even more difficult — record low interest rates and stagnant wage growth makes saving a hard task, especially when the cost of buying your own home is rising.
According to a survey carried out by the Royal Institution of Chartered Surveyors (RICS) on Thursday, rents are set to surge by 15% by 2023. That’s because there’s a dearth in the rental property market — 22% of survey respondents reported a fall in new landlord instructions in the last three months, the eighth quarter in a row where the number of rental properties has fallen.
Brits will undoubtedly feel the pinch because while prices are rising, earnings are failing to keep up with the cost of living. Last month, the Office for National Statistics revealed that wages have risen at the slowest rate in six months.
But if people in the UK think that the impending rent rise marks the right time to buy a home, they should think again.
To get on the property ladder, you need a deposit, which is about 16% of the total cost of the house, according to the Halifax first-time buyer review. If you’re trying to save for a deposit, stagnant wage growth will make it difficult and record low interest rates will make it even more painful when you’re trying to grow your savings. On top of that, low rates make borrowing cheaper resulting in people taking on more debt than ever, spending £900 more on average than they received in income during 2017, says the ONS.
