House prices in the South West of England will see the highest growth rate in the UK over the next four years, with the average home to cost £291,184 by the end of the decade, according to research published today by BNP Paribas Real Estate.
House price growth will reach 33 per cent by 2020, fuelled by the positive impact of the Help to Buy Scheme on sales rates, the buoyant service sector and rising building costs. The figure is more than double London’s predicted house price rate growth of 16.1 per cent, and rises well above the total average growth for the UK of 20.1 per cent.
The highest annual growth rate over the period will be seen in the next 12 months, with South West house price growth accelerating from 3.82 per cent in 2015 to 7.29 per cent by the end of 2016.
The region has seen a continued drive from house builders, developers and investors to acquire additional strategic land in the region.
Adrian Owen, Head of Residential and BNP Paribas Real Estate, said: “The extension of the Help to Buy initiative has continued to assist volume house builders to improve sales rates in particular in areas with relatively low incomes and a new build supply.
“Build costs continue to be a challenge for house builders to manage, with most having seen increases in recent months and the feedback is that this is now predominantly driven by a shortage of skilled labour.”
The research found that house price growth would be uneven across the UK, with some regions, such as the North, Scotland and Northern Ireland particularly exposed to the impact of weak global demand on manufacturing.
Average UK house prices will rise 4.7 per cent to £206,314 in 2016, pushing the cost of the average home above £200,000 for the first time. By the end of 2019, average prices will rise by 20.1 per cent to £236,691.
Adrian Owen, said: “Regions with a greater economic contribution from the relatively well-performing service sector will see the stronger price growth, particularly where there is still a degree of catch-up following the financial crisis. We expect the South West and South East will outperform for these reasons over the medium term.”