BBC (2016) EU referendum: Brexit ‘could boost NHS by £100m a week’ . Available at: http://www.bbc.co.uk/news/uk-politics-eu-referendum-36450749 (Accessed: 18 June 2016). In-line Citation: (NHS BBC, 2016) 21st Century Challenges, 21 (2015) Britain’s greying population . Available at: https://21stcenturychallenges.org/britains-greying-population/ (Accessed: 18 June 2016). In-line Citation: (21st Century Challenges, 2015) TRADING (2016) United Kingdom public sector net borrowing | 1993-2016 | data | chart . Available at: http://www.tradingeconomics.com/united-kingdom/government-debt (Accessed: 18 June 2016). In-line Citation: (TRADING, 2016)
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O LIVER W OODCOCK
The ever-growing problem of UK house prices
Will the next generation ever be able to afford a home? The average London house price has gone beyond £500,000 and, with evidence that population is rising at a faster rate than housing stock, that figure is likely to rise. Nowadays, only 43% of 20-45 year olds are saving with the intention of purchasing a home; a figure that suggests that the majority of people no longer believe they’ll ever afford a London home. Furthermore, 79% of the same age group states that banks aren’t willing to lend them money or propose a suitable mortgage. Not only are we seeing prices rising faster than GDP, but this effect is exacerbated by the current lack of inflation at 0.3%. Thus, these increasing house prices aren’t just inflationary but are real and, therefore, are worsening the impact on the affordability of housing. Before the effect of Brexit upon house prices, prices had risen by 14% over a yearly period, but how does this rise affect the next generation? The major issue of not owning a house is the loss of this great asset; in previous years the selling of property at an elderly age meant the money received could, for example, be passed onto children to form a foundation for them to potentially buy a home or use the money to meet healthcare requirements. If this asset isn’t available, the ability to do this ceases to exist and the upcoming generation will be worse off in terms of wealth. Furthermore, when owning a home of increasing value there is a wealth effect on the owner causing changes in consumption and potentially investment. Without a house as a store of wealth, there will be a likely reduction in consumption and, consequently, an indirect effect on the government’s deficit. It is therefore important that affordable housing returns, especially as the price of renting (the next best alternative) has also risen at a much greater rate in London than any other region. However, when considering the UK as a whole, we cannot ignore that the majority of people attempting to get on the housing ladder can afford to buy housing in certain regions (although these regions are not as prosperous as London). In stark contrast to the excessive £500,000 London average house price, the median house price in other cities, such as Bradford, is £40,000. This distortion in house pricing across the UK may provide affordable houses, but, with London’s GDP estimated at £309.3bn (2012) (much greater than any other UK city), there is a growing problem of occupational immobility; although there may be skilled workers in the North, the difference in living costs between regions prevents movement of labour to London from the rest of the UK. Thursday 23 rd June 2016 saw Britain vote to leave the European Union, a decision which went against the advice of many economists. Nevertheless, will the departure from the EU decrease house prices? The government Treasury
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