Posted on 22nd September 2014

The Knock-on Effect of the Burgeoning Property Market

Martin Williamson, Head of Residential Property

It's not only people's pockets that are starting to feel the strain in today's economic conditions, it's their properties too.

Surprisingly, the average size of the UKfamily home has shrunk by nearly half, according to the Royal Institution of Chartered Surveyors (RICS).

In 1924 it was reported that families were able to enjoy 1,647 square feet while today the average family has only 925 square feet to live in. This is clearly offset to a certain extent by the fact that 90 years ago people were more likely to have bigger families, compared to todays typical family with 1.7 children (ONS data.)

According to a survey by the Post Office, parents are finding themselves forced out of their own rooms as 31% of those with children under the age of 18 were found to be offering their larger bedrooms to their children. Furthermore, 21% of those surveyed admitted that their children share bedrooms, which further highlights the property shrinkage issue, as fewer bedrooms can be accommodated.

Unfortunately, it appears, this trend is only going to continue as the housing market grows stronger.

Young people, who are in work, are being forced to live with their parents as they cannot afford to fly the nest or have joined the so-called boomerang generation that returns home later in life. Shelter, the housing charity, recently published a census, which revealed that almost two million people in England aged between 20 and 34 live with their parents or grandparents with 48% of them blaming housing costs, according to a YouGov poll.

The latest house price figures don't bode well for youngsters either. Despite the property market cooling down following the introduction of stricter mortgage lending rules, house prices have continued to rise. The Halifaxreports that the average house price is now £186,322 with annual inflation reaching 10.2%.

There is one glimmer of hope for youngsters and first time house buyers, though, in the continuation of the Government's Help to Buy scheme. Ministers have said nearly 40,000 people had benefited from the scheme, which launched in April 2013, and used it to buy a house. But critics of Help to Buy have argued that the scheme adds to the risks of a housing price bubble. The Bank of England is due to review Help to Buy in September, and can make recommendations to change or close the scheme. Meanwhile, research from the Institute for Fiscal Studies suggests home ownership is falling among younger generations, with only 21% of people born in 1980s owning their own home by the age of 25, compared with 34% in the 1970s and almost half born in the 1960s.

Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.