Waning demand for the highest-value homes won’t stop house prices eclipsing their pre-crisis peak.
UK house prices will not slow down despite rising costs and a looming interest rate hike, according to a new report by analysts predicting a 30 per cent surge in average values by 2019.
BNP Paribas Real Estate forecasts that house prices will jump by 30.4 per cent across Britain to reach £260,000 in the next four years. According to The Times, they will be “buoyed by robust economic growth and the chronic undersupply of new homes”. But growth will not be evenly spread, with homes in southwest England set to surge by close to 40 per cent while the north will increase by 19 per cent.
London will also lag behind most areas, recording the second lowest growth rate of 25 per cent, which BNP says is the result of a more progressive stamp duty regime hitting demand for properties worth more than £5m. For the average buyer, however, London will remain the most unaffordable market, with average prices – already nudging half a million pounds – set to end the period around 80 per cent higher than their pre-crisis peak.
The report comes on the back of the latest figures from Hometrack, which tracks house price rises in 20 UK cities and found the average price grew 4.3 per cent in the three months to July, the highest quarterly growth since 2004. The Daily Telegraph says the index continues to predict house price growth of 10 per cent for 2015 as a whole.
House price rises are being fuelled not only by the lack of new homes, but also by a shortage of existing flats and houses being put up for sale – and that is starting to affect renters as well as buyers.
The Guardian reports that Countrywide estate agents found rental costs across the UK accelerated in July, reaching an average of £937 per month. London recorded the fastest rise, of 6.8 per cent, taking the average rent in the centre of the city to £2,583 a month. The median rent for a one-bedroom flat has now risen above £1,000 in 18 of 33 boroughs, making it one of the most expensive cities in the world to live.