The long-term key to a prosperous UK property market is partly down to growth in the UK population. The Office for National Statistics (ONS) recently released a number of projections going forward which may surprise many people.
UK population growth
The ONS forecasts that the UK population will grow by a net 3 million up to 2028. This equates to a population in 2018 of 66.4 million against an expected population in 2028 of 69.4 million. This is a 4.5% increase which is still fairly strong when you bear in mind the netting of births/deaths and immigration/emigration. The growth in population between the various elements of the UK does however vary widely over the decade up to 2028:-
• England’s population will grow by 5%
• Scotland’s population by 1.8%
• Northern Ireland by 3.7%
• Wales by 0.6%
Interestingly, over the same period 27% of UK population growth is expected to come from a netting of births/deaths with 73% from net international migration. This comes at a time when the UK government has been promising to reduce immigration in order to reduce alleged pressure on public services.
The UK population is expected to pass 70 million in 2031 reaching 72.4 million in 2043. One factor we are fully aware of but which will become even more prevalent going forward is the number of older people. The proportion of the UK population aged over 85 is set to double over the next 25 years. This will put huge pressure on the NHS and other medical services with Scotland more impacted by an ageing population than any other part of the UK.
While forecasting population growth is certainly not an exact science it does give you an idea on which to base your investment criteria going forward. For example, similar estimates in 2016 forecasted an additional 400,000 in 2028 and 900,000 more by 2043. How Brexit will impact these figures remains to be seen because so far we have no idea how immigration will be handled.
Demand for UK houses
Whichever growth figures you look at there is no doubt that demand for UK houses will continue to grow. We also have more people than ever before living by themselves, often as a result of marital separations. These figures certainly support Boris Johnston’s promise to inject significant funding into the private sector but there will also be ever increasing demand for public sector housing.
We can argue the rights and wrongs of the 1980s buy to let system introduced by Margaret Thatcher but the UK is currently chronically short of council/social housing.
It is fair to say that Theresa May was not exactly on the side of private landlords in her last couple of years as Prime Minister. She introduced new taxes together with additional protection for tenants often at the expense of landlords. There are hopes that Boris Johnson will look to repeal at least some of these tax changes but at this moment in time he needs to tread carefully and first gain the trust of the UK electorate. However, in the longer term it is safe to say that rental properties in the private sector will become more sought-after which will place upward pressure on rents and encourage capital growth.
Sometimes it is difficult to see the woods for the trees when it comes to the UK economy, property market and population growth. If we try and look beyond the current Brexit melee there certainly are reasons to be cheerful and increase your UK property exposure.