Cebr: UK house prices to jump £60,000 in five years
Experts say property prices will reach £320,000 by 2020.
The average cost of a UK home could jump nearly £60,000 by 2020 according to the Centre for Economics and Business Research (Cebr).
The economic forecaster says prices for the average property may rise to a mammoth £320,000 in the next five years.
By the end of 2015 alone house prices are expected to be 5.6% higher than average prices in 2014, reaching a record high of £263,000.
How prices will change
Below is a summary of how the Cebr expects house prices to change over the next five years.
|
Year |
Average UK house price |
Year-on-year change |
|
2015 |
£263,000 |
5.6% |
|
2016 |
£272,200 |
3.5% |
|
2017 |
£283,600 |
4.2% |
|
2018 |
£295,600 |
4.2% |
|
2019 |
£308,400 |
4.3% |
|
2020 |
£321,600 |
4.3% |
Source: Cebr
Prices are predicted to be 3.5% higher in 2016 than they were this year, with further annual increases expected to be near 4% in the following years.
What's pushing prices up?
The Cebr had predicted that house prices would rise by 4.7% in 2015 but has revised the figure up to 5.6%.
It says the lack of property coming onto the market is putting pressure on prices.
A major concern is the lack of new homes being built. But the Cebr points out that a range of other factors are limiting supply too.
One problem is the UK’s ageing population. Retired people are less likely to move home, which is curbing the number of bigger properties coming onto the market.
There’s also been a substantial increase in the cost of moving up the property ladder, making it incredibly difficult to upsize. In London for example, the gap between a a purpose-built flat and a terraced house has nearly quadrupled from £46,000 in 2000 to 176,000 in 2014.
Another problem is the high cost of moving home. The Cebr singles out Stamp Duty, which is having a big impact on prime properties following changes last December. Find out more in Stamp Duty explained and How to beat Stamp Duty.
Interestingly, supply is also being limited by households that expect property values to keep rising. Homeowners are keen to sell at top of the market, so are holding off to get the best possible price.
What should be done?
The Cebr says all these elements must be considered to address the problem of rising house prices.
It argues that building more homes alone won't be enough to address the shortage of properties, and more should be done to tackle the other issues stagnating the market and driving prices up.
One solution it suggests is more incentives to encourage ‘rightsizing’, like a Stamp Duty reduction, for the growing ageing population that are hanging onto larger properties.
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