Growing Populations And House Prices
The number of births in England and Wales during the first half of 2012 rose dramatically, according to The Office For National Statistics. There were 729,400 births in the six months up to the end of June, with this number has consistently exceeded the number of deaths for the past 10 years (and the difference is increasing).
In June 2003, there were 77,000 more births than deaths, but this has risen to 239,000 in 2013 – a combination of extended longevity and higher standards of living.
The recent increases in UK population have been mainly attributed to immigrants arriving in the country, but this is no longer the case. In 2008, the net increase in population was broken down into 244,000 due to net migration, and 204,000 from births, but the tightening criteria has seen the former drop to 156,000 by this year, meaning births now contribute more than half of the rise.
London saw the largest increase in population, growing by almost 1.3% in the twelve months to June 2012, particularly the boroughs of Tower Hamlets, The City of London, Camden, Kingston and Hackney – all of which grew by more than two per cent. The slowest rate of population growth has been in the North-East.
The UK population is generally predicted to keep growing, from its current 63 million in 2011 to a projected 70 million by 2027, the main drivers being increased longevity and higher birth rates. There is also a trend towards smaller, more fragmented households (divorces, people living alone) which increases the pressure even further on the housing stock.
With the level of new builds calculated to be less than half of what is required (and some say as little as 25% of target), the demand for housing will therefore only intensify. This should lead to increased house prices and also higher rents, depressing the levels of owner occupation and potentially encouraging a more continental model (where people accept renting for life). The Government’s recent initiatives to help buyers will assist the construction sector, but may just stoke up the housing market further by exacerbating the imbalance between demand and supply. This will however be welcome news for home owners, particularly the 700,000 families who still find themselves with so-called negative equity (estimate: Council of Mortgage Lenders), thankfully down from the 1.6m recorded in the late 1990s.
House prices had fallen by an average of 20 per cent between 2007 and 2009, but this has stabilized thanks to low interest rates and also quantitative easing, and many areas are now seeing slow but consistent increases.