House Prices to Soar over the next 4 years.

In spite of “Brexit”, House Prices to Soar over the next 4 years despite Brexit; according to the Centre for Economics and Business Research (Cebr). As the UK economy goes from strength to strength over the next few years house prices are expected to grow by nearly 25% by 2021. Pushing the value of the average home to £272,000 by 2021 the report predicts – a £52,000 increase compared with 2017 and a rise of 23.6 per cent. Kay Daniel Neufeld, a Cebr economist and main author of the report, said; “Already towards the end of 2016 indicators pointed to a stabilisation in the housing market, a trend that has continued in the first months of 2017. “Transaction numbers are slowly recovering from the introduction of a stamp duty surcharge on second homes in April 2016, which has led to considerable distortions in the market. “Mortgage approvals, are nearing post-crisis heights, boosted by low-interest rates and favourable borrowing conditions.” Cebr anticipates that the growth rate will slow, over the next two years as Brexit negotiations unfold. Experts predict that growth will be below the 7.5 per cent year-on-year increase in house prices recorded in 2016. It expects UK property prices to grow by around 4.4 per cent during 2017 – the slowest pace seen since 2013. According to the report, in 2019, growth is expected to accelerate, with an annual increase of 5.7 per cent growth to be expected in 2019, and growth of around six percent in 2020 and 2021. Therefore, the market is still attractive to investors; especially international buyers. Property investors from overseas have the added advantage that the pound is comparatively weak.

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Low Property Supply

Cebr said a shortage of available housing stock, will continue to help push house prices upwards. The cheap opund makes UK property investing more attractive to the international investor makret. Shaun Church, director at mortgage brokers Private Finance, added: “Homeowners will be thrilled to hear that house price growth isn’t expected to be slowed down by Brexit, particularly as growth is currently relatively subdued compared to recent years. Rising property prices mean homeowners can re-mortgage to a more affordable deal as they fall into a lower loan-to-value (LTV) bracket, or withdraw cash from their homes to be used for things like home improvements. “Those who decide to sell will also see a bigger return on their original investment. As the property is most people’s biggest asset, this can be a significant part of retirement financial planning. Therefore, retirees seeing their home values rise; could receive a significant bonus to their retirement funds by selling up or downsizing. “It’s a good sign that consumer demand for housing will keep the wheels of the property market turning, despite the uncertainty of Brexit.” Figures for the first quarter of this year suggest the property market is moving along at a steady pace. Therefore, showing little sign of a property market meltdown, some had predicted. However, increased living costs from rising inflation; will squeeze consumers’ disposable incomes and dampen housing demand in 2017 and 2018, furthermore, stagnating wage growth will exacerbate affordability, it predicted.

Property Price Predictions

Cebr’s predictions for average UK house prices across each of the following years:

  • 2016, £211,000
  • 2017, £220,000
  • 2018, £229,000
  • 2019, £242,000
  • 2020, £256,000
  • 2021, £272,000