In this article we look at the key influences on one of the world’s most in-demand property markets – and ask experts what the future may hold.

1. A shortage of homes

In spite of many financial and regulatory incentives from the government, the number of new homes built each year is still well below the minimum required to keep up with demand, according to the National Housing Federation1.

Economist and housing expert Dame Kate Barker predicted in 2004 that an extra 250,000 homes are required every year over the next 20 years to achieve that2. But since her recommendations were published, only 156,000 were built during 20153.

“The UK construction industry is not oriented towards a high volume delivery programme,” says Adam Challis, Head of UK Residential Research at Jones Lang LaSalle.

“After the recession we lost the capacity to build the volumes of homes that the government aspires to after many small and medium size builders failed to re-enter the market.”

With the intention to reduce the shortfall in housing, in November 2015, Chancellor George Osborne announced that the government would spend £2.3 billion and reform the planning process to help build 400,000 affordable homes by 20214.

2. A growing population

A key reason why more new homes are needed is that the UK population is expected to grow from its current figure of 64 million to 70 million by 2031. This means the population will grow by an additional 200,000 people each year, factoring both net immigration and additional births5. This is the equivalent of a city the size of Birmingham every five years.

“The UK’s fast-growing population is one of the greatest challenges facing the property market as demand for homes continues to outstrip supply,” says Paul Deen, Head of International and Private Bank Mortgages at Barclays Wealth.

3. Changing family structures

Not so long ago most households comprised traditional family units. But this model has given way to a much more varied set of lifestyles, with more people being single, divorced or co-habiting6. This has been created in part by the dynamics of the property market. It is taking longer for many people to save up enough money to buy their first home and therefore many are getting married later and having children later too6.

4. Changing households

Research by agent Strutt and Parker reveals that most popular future household structures will be couples without children (49%) followed by couples with children (21%) and multigenerational houses (15%): homes with grandchildren, children and grandparents living under one roof. Single people will make up 7.9% of households followed by single parents at 3.4%7.

This means that the housing needed to provide homes for these kinds of family units would have to reflect these new ways of living.

“For example, in the US this is already happening in what’s called ‘multi-family apartments’, where the bedrooms are all of equal size with their own storage areas and are accessed easily from the central lounge/dining area rather than being all stuck at the back,” says Tim Swaddle, Head of Residential at furniture supplier Roomservice by Cort.

Find out more about our mortgage products

5. Ageing population

The UK population is at its oldest ever, government figures show. People over 65 years old now represent 18% of the population while those over 75 constitute 8%. This is a trend that has been on the increase since at least the 1970s and appears likely to continue as people live longer 8.

At the top end of the property market by price and size, this means that many older owners are living for longer and often not selling up or downsizing, according to Mark Hayward of the National Association of Estate Agents.

Research by Strutt and Parker highlights this trend. “One might expect to see a high percentage of baby boomers (people born after the Second World War) selling property to raise capital for pensions and their children’s housing needs,” says Stephanie McMahon, Head of Research.

“Instead we found only 9% of those aged 40-59, and 0.4% of those aged 60 or older rated financial support for children or relatives as important or very important when they were asked about motivations for moving.”

6. Fewer people will move

Increased moving costs, higher property purchase taxes – particularly at the top end of the market9 – could persuade more people to stay put. This is already reflected by the January 2016 Land Registry figures, which showed that the number of homes sold every month (84,517) was 4,000 less than a year ago.

Mark Hayward doesn’t think the UK will now ever see the sales volumes witnessed before the recession.

“In today’s time-poor society many people don’t want the upheaval of moving home and the situation is also self-fulfilling – there is less property on the market so people can’t find what they want and therefore delay moving home,” he says.

7. The growth of the rental market

The average deposit to buy a first home in the UK now stands at £72,30010 and, faced with a considerable amount to save, many people continue to delay their first home purchase.

“The private rental sector is the fastest growing tenure in the UK from 8% of all homes in 2001 to almost 20% in 2016,” says Adam Challis.

He believes that the direction of travel is “unassailably” towards rented accommodation as the ‘new normal’ for a much longer period of many people's lives.

This is illustrated by a recent report by agent group Countrywide, which concluded: “Generation Y (people born since the late-1980s) will spend longer than any other generation in the private rented sector” 11.

8. The end of boom and bust?

Applying for a mortgage is a much more rigorous process than before the Bank of England’s Mortgage Market Review12, which announced legislation designed to analyse people’s ability to pay a mortgage during the application process. This legislation, which came into force in April 2014, was implemented by the Financial Conduct Authority13.

“We saw that as soon as the review happened there was a dip in mortgage approvals,” says Liam Bailey. “So the market has become a little quieter but the Bank of England would argue that it is trying to avoid the mistakes made at the start of the millennium.

“The hope is that these changes will make the property market more resilient in the longer term and avoid more boom and bust scenarios.”


All of these trends point to one likely outcome. The number of people owning their homes in the UK will drop, while renting becomes a more common way for people of all ages in the UK. And this has already been taking place. Between 2005 and 2013 the number of privately rented homes in the UK nearly doubled from 2.5 to 4.9 million14.

What's next?

If you’re interested in buying a property in the UK visit our mortgage section, or you can find out more about International Banking services.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Remember that where the mortgage is denominated in a currency other than your home currency, changes in the exchange rate may increase the equivalent value of the debt in terms of your home currency.

Want to buy a UK property?

Talk to us about your mortgage options

Call us on

To open an International Bank Account and apply for an International Banking mortgage: