Further property price rise forecast over the next five years
Anyone who has been watching the housing market over the last year will have seen the upward trend in house prices, not just in the London and south east but countrywide. According to new research this upward trend is set to continue over the next five years and it is anticipated that this will amount to £60,000 in this period.
During 2016, house prices are predicted to rise by 3.5% and further annual increases of around 4% in the following four years, all according to the latest analysis provided by the Centre for Economics and Business Research (Cebr).
They have also revised the previous increase of 4.7% in June to 5.6% this month, which will bring the average price of a UK property to a new high of £263,000 this year. Also revealed in this research is that in London, the price gap between a terraced house and a purpose built flat has nearly quadrupled from £46,000 in 2000 to £176,000 in 2014.
Once again the cause of the price rises is aimed fairly and squarely at the lack of properties coming onto the market and we anticipate that households will expect property values to keep rising and few anticipate a downturn in prices. This has not stopped the rise in home ownership, this has gone up dramatically amongst older households since 1981 but with younger households it has collapsed. With retried individuals less likely to move home it has resulted in fewer individuals putting up their houses for sale; added incentives to get this sector to move is needed, possibly a stamp duty exemption or reduction might encourage them to downsize.
The report points out the increasing cost incurred when trying to move up the property ladder, particularly in London. The reason for wanting to move up the ladder has normally been the reason to sell one’s home, this for many is no longer an option. Stamp duty rates saw a substantial increase last December, curbing demand at the prime end of the market. Lack of new builds is not helping the market and the Cebr suggests that the forthcoming Housing and Planning Bill will do little to alleviate the problem.
What we have seen is that the price gap between a first time home and a larger family home has skyrocketed, particularly London, here in particular the rungs of the property ladder are moving further apart, upsizing is not an option.