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Renters to outstrip homeowners by 2025

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The number of people renting property will outstrip homeowners within the next 10 years, PwC has predicted.

Its UK Economic Outlook report suggested that a lack of housing supply and tighter mortgage rules would leave millions more stranded in rental accommodation.

By 2025 it estimates that a quarter of people will be renting in the private sector, equivalent to 7.2 million households.

More than half of those aged under-40 will be renting privately by 2025, it predicted.

The report also suggested that house prices should be expected to rise by 5% each year, reaching an average of £360,000 in the next five years.

Richard Snook, senior economist at PwC, said: “Driven by a decade of soaring house prices pre-crisis and lower loan-to-value ratios post-crisis, the deposits needed by first time buyers have risen significantly.

“As a result, a generation of private renters have emerged and this will increasingly be the norm for the 20-39 age group.

“There is also a rising dichotomy in the market between those (mostly older) households who own outright and those (mostly younger) households who still have a mortgage or rent to pay.”

John Hawksworth, chief economist at PwC, added: “In the long run, a large and sustained increase in affordable housing supply will be required to meet the needs of a UK population that is growing relatively rapidly by European standards.

“This could involve a range of measures including further planning reform, action to address skills shortages in the housebuilding sector and enhanced financial incentives to build more homes.

“But cuts to social rents announced in the budget will tend to work against this for local authorities and housing associations, while private developers may be cautious about expanding too rapidly.

“So we expect housing supply shortages to persist for at least the next decade and realistically expect to see a continuing rise in Generation Rent until at least 2025.”

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