Readers Question: Account for the estimated 3.8 million increase in the number of new houses needed over the next 15 years in the UK.
With house prices falling at the moment, it is hard to imagine that we need an extra 3.8 million houses. Most people don’t want to buy (or can’t get a mortgage). But, in the long run, there are various factors causing increased demand for housing.
- Rising Population. Boosted by net migration, the UK’s population is expected to increase to 65 million in next 15 years (population growth in UK)
- Demographic Changes. These are factors which cause increased numbers of households. For example,
- Higher divorce rates means more people living on their own
- Ageing population – more old people living alone.
- Rising affluence means young people want to leave home.
- Increase in number of second homes. e.g. buying in country
- Increased demand from abroad.
Falling house prices may reduce speculative demand. But, if demand rises as predicted and current low levels of supply are maintained, prices are likely to be squeezed up. What may happen is that increasing numbers of young people will be forced to rent.
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