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Finance

Homes worth £1 million-plus will triple by 2030, report forecasts

The number of homes worth at least £1 million is set to triple by 2030 across the country, a report predicts.

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The forecast would mean that by 2030, around one in every 20 (5.1%) homes in the UK is worth £1 million-plus, according to Santander Mortgages.

One in every four (25%) properties in London is expected to be worth £1 million-plus by 2030. In the London boroughs of Kensington and Chelsea and Westminster, more than 70% of homes are expected to have a value of at least £1 million by 2030.

The report, compiled by a professor at the London School of Economics (LSE) for Santander, predicts the gap between the housing haves who already own large homes, and the have nots struggling to get on the housing ladder will widen, as the “unthinkable” £1 million price tag is attached to more modest properties.

Would-be home buyers will increasingly need to make compromises – such as moving away from friends and family and facing longer work commutes – the report warns.

It said that an average UK home costing £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.

A deterioration in housing affordability will mean the average UK property will be worth nearly 10 (9.7) times the average income by 2030, the report predicts. The current ratio is 7.9.

In London, the average home is expected to cost 16.5 times the average income by 2030, up from a multiple of 11.5 now.

Nearly half a million homes are currently valued at £1 million or more, representing 1.8% of the total housing stock.

By 2020, the number of million pound properties is expected to increase to nearly 689,000, or 2.4% of the housing stock, according to the report.

And by 2030, the number of homes worth at least £1 million is predicted to have tripled to 1.6 million.

Huge variations in property prices across the UK are expected to continue. In the South East, around 7% of homes are expected to be million pound properties by 2030.

But less than 1% of properties in Scotland, Wales, Northern Ireland, the East Midlands, the North West of England and Yorkshire and the Humber are expected to be worth £1 million-plus by 2030.

Over half of homes in the London areas of Camden, City of London and Hammersmith and Fulham are expected to be priced at £1 million-pound plus by 2030.

More than one in 10 homes in some surrounding London commuter belt counties will also be worth £1 million-plus by 2030, according to the report.

In Buckinghamshire, 12.3% of homes are expected to be million-pound properties by 2030, while in Hertfordshire, 10.6% of homes will be at this level, the report predicts.

In Surrey, 15.7% of homes are expected to be million pound properties by 2030, while in Windsor and Maidenhead the expected percentage is 18.5%.

By 2030, the report predicts that 4.3% of homes in Cambridgeshire will be million pound properties, as will 1.6% in Cardiff, 2% in the Vale of Glamorgan, 3.6% in Bristol, 6.9% in Brighton and Hove, 6.3% in Bath and North East Somerset, 3% in Gloucestershire, 2.3% in Cornwall, 4.1% in Kent, 4.4% in Essex, 2.6% in Herefordshire, 8.4% in Oxfordshire, 2.6% in York and 1% in Greater Manchester.

Paul Cheshire, LSE professor of economic geography and the author of the report, said: “By 2030 the divide between housing haves at the top and the have nots at the bottom will be even wider than it is now.

“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.”

The report used official house price figures and considered past patterns in real incomes, population changes, housing construction and interest rates to make the predictions.

Outlining the impact of the predictions, the report said: “If house prices rise faster than real incomes – as they persistently have over the past 50 years – then the quality of housing buyers can afford also falls.

“New home owners have to make do with smaller houses in less convenient locations – maybe further from their jobs, friends, and family and a good local school, meaning the need to compromise increases.”