Will the bubble burst? Boost for homeowners as property prices soar by £1,500 a month
HOUSE prices will rocket by at least 12 per cent over the next 18 months, economists predicted last night.
By: Giles Sheldrick
Homeowners are sitting pretty as house prices have boomed [GETTY]
In news that will bring cheer to millions of homeowners, experts said the boom will last until 2016.
They predicted property prices will continue to rise by at least five per cent over the rest of this year and could leap by a further seven per cent in 2015.
The confident forecast came after figures from the Land Registry yesterday showed no sign of a slowdown in the market.
Prices were up by 6.7 per cent year-on-year in April and by an incredible 17 per cent in London. In April alone, London prices were rising by an average £588 a day, the highest rate since calculations began in 1995.
I can see prices rising by another five to six per cent over the rest of this year and by seven per cent overall in 2015
Howard Archer, economist
Nationwide, the price of the average property rose by £10,810 from £161,259 to £172,069. Based on these figures, millions can look forward to seeing almost £21,000 added to the value of their home over the next 18 months.
But according to separate figures from the Office for National Statistics, the average home with an outstanding mortgage is now worth £250,000. A 12 per cent rise would see £30,000 added to these values by 2016 – an increase of more than £1,500 a month.
That would mean property is rising in value at its fastest rate since 2007.
Economist Howard Archer said: “I can see prices rising by another five to six per cent over the rest of this year and by seven per cent overall in 2015.
Those considering to move house now are in a better position [GETTY/MODELS USED]
“If the economy continues to do well, employment continues to go up and there continues to be a shortage of properties, that will underpin values.
“I am hopeful a bubble will be avoided but I am not confident it will be. People have short memories.”
Andy Frankish, of Mortgage Advice Bureau, said: “Annual growth of 6.7 per cent will be good news for those who not so long ago were victims of a stagnant market and unable to draw on enough equity to consider a move.
“Drastically reduced repossessions (down 33 per cent year-on-year) should also confound the cynics and are an encouraging sign we are largely witnessing healthy growth and moving forward on a steady footing.”
Growth is reaching all corners of the UK with prices strengthening “appreciably” in almost every region.
But there is concern that not enough houses are being built.
Jeremy Duncombe, director of Legal & General, said: “In all areas of the country there is a real need to build more houses. At the moment demand outstrips supply, which increases the pressure on prices and makes it harder for people to own their own home.”
Official figures show the number of homes completed in 2013 was 109,370 – the lowest since 2010 and a fall of five per cent on 2012.
Experts estimate around 240,000 new homes need to be built each year to meet current levels of demand.