THE average house price in Scotland could exceed a quarter of a million pounds by the end of the decade, economists have predicted.
Scottish house prices could rise by nearly a third (30%) from a forecast £200,000 average this year to £259,000 by 2020, according to the PricewaterhouseCoopers (PwC) UK and regional house price analysis.
With house buyers facing a triple whammy of affordability, stringent credit conditions and a sharp rise in lender deposit requirements, it’s perhaps not surprising that Generation Rent is here for the medium term at least.Paul Brewer
House price growth in Scotland is predicted to be among the fastest in the UK, with only Northern Ireland (36%), East Midlands and South East England (31%) growing faster.
A triple whammy of rising prices, stringent credit conditions and rising deposits is tying more under-40s to private rented accommodation, PwC said.
This is expected to tip the balance towards rented accommodation by 2025, with more tenants than homeowners, it added.
More than a third of households are predicted to own their home outright by 2025 but this will be mostly older people.
Meanwhile, PwC says Scottish economic growth will be slightly slower than the UK as whole this year, at 2.4% compared with 2.6% across the UK.
Paul Brewer, government and public sector partner at PwC in Scotland, said: “With house buyers facing a triple whammy of affordability, stringent credit conditions and a sharp rise in lender deposit requirements, it’s perhaps not surprising that ‘Generation Rent’ is here for the medium term at least.
“First-time buyers are particularly hard hit, with many now having to turn to private landlords as demand outstrips supply in the housing market.
“Affordable, quality housing is a necessity if we are to achieve our economic ambitions.
“With the right to buy scheme set to end on July 31 2016, it will be interesting to see how the Scottish Government’s strategy addresses these issues and, crucially, plugs the gaps at this end of the housing market.
“Collaboration among developers, social housing providers and government alongside radical and innovative investment measures will be key to solving Scotland - and the UK’s - housing market challenge.”
John Hawksworth, chief economist at PwC, said: “In our main scenario we expect UK GDP growth to average around 2.6% in 2015, which is only slightly above trend but could again be the fastest growth rate in a fairly slow field of G7 economies.
“Consumer spending and business investment will remain key drivers of UK growth in 2015 and 2016, offsetting continuing weakness in net exports and planned government spending cuts.
“Risks to growth are weighted somewhat to the downside in the short term due to international risks, including uncertainties relating to Greece.
“But there are also upside possibilities in the medium term if the global environment improves.”