London house prices to double by 2025, rents to go 27% higher

The average home price in the UK is forecast to rise 50 percent in next 10 years while London house prices will be double by 2025.

However, the average rent is forecast to rise 27 percent. The number of property millionaires is encouragingly up since January. The rise in housing prices will keep the pressure on consumer savings. The new Scottish property tax is slowing down the pace of house price in Scotland.

The National Association of Estate Agents and the Association of Residential Letting Agents forecast the average price in the UK will rise from £280,000 to £419,000 by 2025. It has predicted that London house price to double to reach £931,000.

According to a report published by BBC, the average cost of renting a home is expected to go up by 27 percent to £171 from £134 during the next decade. Considering the house prices during the past decade, the association has made the forecast on future rise of prices in next 10 years.

The number of property millionaires is increasing in the UK's housing market. Scotland has few property millionaires. The growth numbers from January are not as rosy as it's for the rest of the UK. The new Scottish property tax, which was introduced in April, is impacting the numbers.

East London, barking and Dagenham, Newham and Waltham Forest are few areas, which are witnessing higher growth rates in property prices.

the guardian reports that London's rising housing segment has created a new breed of east London property millionaires. Over 620,000 people own a house or flat worth £1 million or more. This is up by 75,000 from January, according to a research done by Zoopla.

The cost of an average home is £515,000 and it's expected to reach £1 million by 2025. The rent per week in London is forecast to be £314 by 2025 from the current £234. The average rent in the UK will rise by 27 percent from £134 to £171 during the next decade.

Evening Standard reports that the rise in rentals and house prices will increase pressure on savings. The price inflation coupled with low wage inflation will result in lending restrictions. Mark Hayward of the National Association of Estate Agents (NAEA) said: "This situation will also create a shortage of affordable housing means owning a home will continue to be a distant dream for many."

Hayward said: "House prices are only going to go one way and unfortunately that is up. For so many already priced out of the market, this is news aspiring house buyers will not want to hear."

Hayward further said that "Ongoing house price inflation combined with low wage inflation, tighter lending restrictions and a shortage of affordable housing, means owning a home will continue to be a distant dream for many."

Based on the forecast for next decade, it's assumed that yearly growth rate would be 4.1 percent for the UK housing prices, while it's 6.3 percent for London property market. Coming to rents, the forecast of growth is 2.5 percent annually for UK houses, three percent for London market.