Supply shortage means 'average house price up £52,000 by 2021'
The Centre for Economic and Business Research has surprised some in the industry by stating that the average house price across the UK will rise £9,000 this year and £52,000 between now and 2021.
The means the average UK house price by the end of 2017 will be £220,000, and by the end of 2021 it will be around £272,000.
CEBR says the rate of increase this year and next will be less than five per cent annually as Brexit uncertainty goes on; this compares with a 7.5 per cent year-on-year increase reported by the consultancy in 2016.
However, it says there will be a growth spurt from 2019 with an annual increase that year of 5.7 per cent followed by six per cent in each of 2020 and 2021.
The consultancy blames the long-term shortage of suitable housing for the general rise, although it says overseas purchasing of high-end London property while the pound is still low in value will fuel price inflation in those pockets of the market.
“Rising inflation and stagnating wage growth are expected to depress households’ spending power in the coming months. The worsening financial situation of households could easily have a knock-on effect on consumer confidence, suppressing housing demand in 2017 and 2018” according to Daniel Neufeld, the main author of the report and one of CEBR’s economists.