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Could house deposits reach £500k by 2047?

Could house deposits reach £500k by 2047?

Deposits for houses in parts of the UK could reach as much as £500,000 by 2047, according to analysis of historic data.

Estate agent Coulters looked at UK House Price Index data going back as far as 1995. Its analysis found Brighton and Hove could experience the biggest house price growth, with the average property predicted to top £3.4m in 26 years' time.

Other areas Coulters’ analysis tipped for more than 500 per cent house price growth over the next two decades included Cambridge, Bristol, and Southend-on-Sea.

Local Authority2021 house price2021 deposit (15%)2047 house price2047 deposit (15%)% increase
Brighton & Hove£400,636£60,095£3,400,141£510,021748.7%
Hastings£240,319£36,048£1,788,199£268,230644.1%
City of Bristol£316,177£47,427£2,288,776£343,316623.9%
Thanet£269,574£40,436£1,833,634£275,045580.2%
Southend-on-Sea£309,102£46,365£2,087,729£313,159575.4%
Hinckley & Bosworth£244,886£36,733£1,631,628£244,744566.3%
Cambridge£474,824£71,224£3,135,625£470,344560.4%
Basildon£334,523£50,178£2,181,497£327,225552.1%
Brentwood£445,723£66,858£2,898,590£434,789550.3%
Hertsmere£479,641£71,946£3,105,916£465,887547.6%

“Whilst deposits of £500,000 seem like a frightening prospect, the figures are based on historic data from a period which has seen some huge growth,” Graham Taylor, managing director and financial adviser at Hudson Rose, told FTAdviser.

As of June, HM Land Registry data shows house price growth was on an annual rise of 13.2 per cent. Coulters data is calculated based on house prices rising by 6 per cent each year.

“The key thing is to consider what will happen to incomes over the same period,” Rose continued. “With wages rising more slowly than house prices it seems like the affordability gap is set to continue.”

In February, estate agent Benham and Reeves calculated the UK’s house price to income affordability ratio at 9.94 - its highest level since 2011.

Marc von Grundherr, Benham and Reeves’ director, said “earnings have failed to keep pace with house prices”, which means “it’s very likely we could see this issue of affordability grow larger before it starts to reduce”.

For Rose, the biggest concern raised by Coulters’ research is the “widening disparity between the most and least expensive local authorities”. 

Whilst Brighton and Hove’s average property price is projected to top £3.4m in 2047, Blackpool’s average property price is projected to top just £328,255. It means Blackpool is estimated to be more than ten times cheaper than Brighton and Hove.

Rose reckons investment from the government and a move away from London-centric policies will have to address this gap and “even the spread”.

Carl Shave, director at Just Mortgage Brokers, called Coulters’ 26-year predictions “eye watering figures,” before adding: “Dare I say, based on historical house price rises you can never say never.”

Shave continued: “If you went back in history 26 years and asked the opinion for the outlook on house prices, I doubt many would have predicted the huge increase we have experienced, so who’s to say these stated figures will not materialise, however unrealistic they may seem in current times.”

Crunching the numbers

Some experts have questioned the accuracy of Coulters’ projections, considering their longevity and the assumption that house prices will rise by 6 per cent each year for the next 26 years.

Whilst she called the research “fascinating”, Sarah Coles, personal finance analyst at Hargreaves Lansdown, said it ultimately rested on the assumption that these prices are guaranteed.

“The research takes average monthly growth rates since 1995, and projects them forward assuming house price rises will be the same in future as they have been in the past,” she explained.