Population Forecasts in the UK.

Population Forecasts in the UK. Source: ONS

Population forecasts are an inexact science. To a large extent they are based on past trends; therefore, they are always liable to be wrong. However, the Office of National Statistics makes a prediction that the population of the UK will increase to :

• 65 million in 2016
• 71 million in 2031

The average age of the population is also forecast to rise, leading to an ageing population. This will lead to an increase in the dependency ratio (more people receiving state benefits than paying income tax). The rise in the average age, is partly mitigated by migration, which tends to be of younger people.

The causes of population growth are equally split between:

• Higher birth rate than death rate
• Net Migration into the UK

Population Growth in the UK

Source: ONS
High birth rates are partly attributed to a large second generation immigrant population, who for cultural reasons tend to have higher birth rates. The UK’s population growth is also in marked contrast to many other western European countries such as Germany, France and Italy, which are experiencing falling populations.

Effect of Population Growth on Housing Market

In increase in the population of 5% by 2016, provides a major challenge for the UK housing Market. Putting aside the short term difficulties of the credit crunch, a rising population requires a rising housing stock; especially since average households sizes are declining.

As we mentioned in this post, Why is there a housing shortage in the UK? we mentioned many reasons why it is difficult in the UK for housing supply to keep up with the rising demand. If difficulties in increasing supply persist, we are liable to see a continued squeeze on the limited housing demand. The consequences of this will be long term unaffordability in housing persisting.

A rising population faces the country with a serious of difficult choice.

• Large scale increase in house numbers, including the building of new towns (especially in the crowded south east, where demand is at its highest). Without this programme of house building it will lead to higher prices in the long term.
• Stringent controls on migration, possibly requiring the UK, to break with the basis of free movement of labour within the EU.

These are the kind of issues that politicians tend to stay away from. Politicians often talk of the need for more ‘affordable housing’; but, when it comes to increasing building houses on greenbelt land, they soon realise the political costs involved in making a real difference.