UK house prices 'will hit all-time high by 2015' with average prices climbing by 14%
The price of an average house will rise 14 per cent over the next four years, reaching the highest ever recorded in Britain, a report will say today.
Respected analysts the Centre for Economics and Business Research predict the typical home will be worth more than £200,000 by 2015, up from its current £176,000.
While the expected rise is still likely to be below inflation, the positive news will come as a relief to homeowners, many of whom have been left in negative equity as the value of their properties collapsed since the recession. Average house prices peaked at £191,200 in 1997.
Forecast: Confidence in the housing market has been falling but prices are predicted to rise
Douglas McWilliams, CEBR chief executive, said the chronic lack of homes for sale is one of the main reasons that prices will start rising again. He said: ‘We do not expect a house price boom, but the housing shortage is likely to push prices gently upwards.’
But the positive news came as the Council of Mortgage Lenders said that gross lending last month was just £12.6billion, the lowest monthly total in July since 2000.
Average UK house prices
Peter Rollings, chief executive of estate agents Marsh & Parsons, said: ‘Lending remains a world away from the level we need to see for the national housing market to pick up steam again.’
He added that would-be buyers were being ‘thwarted’ by ‘overly strict criteria’ which dictate that only those with large deposits get the cheap deals.
The high cost of a home has had a knock-on effect on the rental market as more and more people cannot afford to buy.
Frustration: Would-be buyers are thwarted as only those with large deposits get the cheap deals
A report from LSL Property Services, the country’s biggest chain of letting agents, said rents have reached an all-time high, with a typical tenant paying £705 a month.
In London, the situation is even worse, with the average rent reaching more than £1,000.
Rents are rising far faster than wages. The latest figures show the average pay rise is just 2 per cent, with research from analysts XpertHR suggesting there was little prospect of pay rises picking up for several months.
Demand: The housing shortage is likely to push prices gently upwards
David Newnes, of LSL, which owns the letting agents Your Move and Reeds Rains, said rents will keep on rising.
He said: ‘Rents are on an upward trajectory. It is unlikely that tenants will gain respite any time soon. Demand from thousands of frustrated buyers each month is underpinning buoyant competition for rental homes, enabling landlords to increase prices.’
LSL said the situation had led to a new take on the ‘Bank of Mum and Dad’, whereby rather than lending offspring the deposit to buy their first home, parents were having to help their children with the deposit needed to rent a property.
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