The Centre for Economics and Business Research, a leading consultancy, says the drought in properties on the market is pushing up prices far more than it predicted - its forecast for 2015 increases has gone from 1.5 per cent to 4.7 per cent.
As recently as March the forecasting company was playing down the prospect of substantial increases but it says a “chronic lack” of stock has changed its view.
However, “with the possibility of higher taxation on prime property and intervention in the rental market less likely, the Conservative party’s victory in the general election will likely support stronger price growth in the second half of 2015. Prices will also see a boost from the lack of fresh properties coming on the market” says a consultancy spokesman.
CEBR now predicts that annual house prices inflation across the UK will be 4.7 per cent by the end of this year, dipping to 3.4 per cent in 2016 and then rising again to 4.4 per cent in 2017. By the time of the next election in 2020, it believes house prices will be no less than 23.6 per cent higher than they were on the last polling day just over two months ago.
Between 2015 and 2020, the average price of a home is expected to increase from £261,000 to £321,000 – a 23.1 per cent change.
Greater London will underperform this year - CEBR anticipates a rise of 3.7 per cent for the full 2015 year - with stamp duty changes reducing price growth in the capital and a strong pound limiting the amount of international buying.
The consultancy says that in addition to supply shortages, strengthening earnings growth and continued low interest rates are also expected to support property prices.