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.
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Brilliant! Let's just keep housing stock chronically low so those house prices can keep rising and people can get richer simply by sitting on there biggest asset until they can sell for double or triple the price five years down the line - and they think they've somehow achieved something, even though it's pure luck and market conditions.
You watch, the average house price in London will be pushing towards the £1m mark if we carry on like this. It must already be pretty high.
The government, however, won't act. They know they've built the economy, in part, on the back of high house prices so they will do all they can to keep it that way. They'll spout off about new housebuilding programmes and the regeneration of brownfield sites, but they won't take any actual action.
What have we had, one comment so far from Brandon Lewis since May? Shows how seriously this government are taking housing!
Jon, you're analysis is right. Part of the answer lies in new house building which the government needs to support.
The other part of the problem is a lack of stock. So often now I go to a valuation and the potential vendor tells me they won't go to market until they find something. Of course, with lots of vendors taking that view very little comes to the market and a vicious circle is created with fewer and fewer properties coming to the market. There are lots of buyers about and every time we launch a good property it creates a flood of viewings. As agents we need to communicate this to potential vendors and encourage more to come to market before they find their next home.
Finally, we need to remember that modest steady growth and lots of stable transactions are far better for our businesses and for our clients than rapidly rising prices which prevent younger people buying and cause people to delay their house sale in expectation of ever higher prices in the future.
Your analysis - not you're! I'm blaming spell check!
The housing shortage and the consequent bump up of prices is only good for those who are selling, who are able to make a tidy profit.
The housing shortage must be resolved though for those buyers, many first-time buyers, who are struggling to get a foot in the door. Do we can any concrete efforts by the government to alter this - I think not.
The issue of low stock needs to be addressed and altered. It shouldn't be the way that many would-be buyers are left on the property shelf, waiting for properties to come to sale. Certain areas are better than others, but this is fast becoming a nationwide issue.
Give them time, Felicity. They recently announced plans to fast-track decisions on brownfield sites and give more powers to local councils over planning. The Budget was, in fact, very assertive when it came to housing, Recognising the mistakes on housing in the last few decades and coming up with a wide range of measures to correct those mistakes.
Haha! Very good, Kelly. In London they want to blight the landscape by allowing more extensions to go upwards rather than outwards, as if this will somehow solve overcrowding. No, what it will do is allow rogue landlords to find more space in which to extract more money from poor, vulnerable tenants with nowhere else to go.
You talk about brownfield sites as if they're the miracle cure for all this country's housing ills. It's a step in the right direction, yes, but there are nowhere near enough brownfield sites to satisfy demand. Bringing all the derelict buildings in the country back into use still wouldn't help.
Besides, there is every chance these could be turned into residential/entertainment units rather than housing, or remain out of reach of ordinary buyers (see what's happening at Battersea Power Station).
More worrying than all this, though, is your misguided faith in this government's ability to take housing in any way seriously. Does Brandon Lewis have a cabinet position? Have we heard a peep from this since May? Have the Tories focused more on their ludicrous RTB scheme than the actual issues that need addressing? No, no, and a big fat yes.
The Coalition government presided over the lowest level of house-building since the 1920s, what makes you think the Tories on their own will change that? Were the Lib Dems holding back their housing policy that much?
They can make all the wild promises they like - fast-tracking regeneration of brownfield sites, building 140,000 new starter homes, giving housing association tenants the RTB, putting loads of cash into Build to Rent. But we won't see any actual action on it, because housing is clearly seen as too unimportant despite being one of the most important issues the UK faces.
"Finally, we need to remember that modest steady growth and lots of stable transactions are far better for our businesses and for our clients than rapidly rising prices which prevent younger people buying and cause people to delay their house sale in expectation of ever higher prices in the future."
This is totally spot-on, Adam. There does seem to be this idea, peddled by the media, the government and certain people in the property industry, that prices going up rapidly year-by-year is a fantastic thing and something to be celebrated. However, as wages stagnate and house prices continue to rise to absurd levels, it's going to become even harder for many people to buy.
As you say, young-buyers - or Generation Rent as the popular coinage goes - are being hit hardest by this. They really struggle to put together a deposit and then, once they've done that, they really struggle to get a mortgage. If they manage that too, then the actual process of buying is made almost impossible by endless surveys, delays with conveyancing, solicitors who seem to take an age to do absolutely everything, and then sellers who get cold feet and withdraw/increase their asking price to see if they can more for their house. That's not to mention gazumping or other possible breaks to the chain. It's not hard to see why so any are just simply giving up.
If more and more buyers are put off, then sellers will find it more and more difficult to sell and you get this vicious cycle whereby no actual activity is taking place. Modest growth with plenty of stable transactions seems much more sensible than the madness we have at the moment. House prices were one of the few things not affected by the financial crisis, quite the opposite, but that doesn't mean they're invincible. If the housing bubble does crash, which there is every chance it will, a lot of people will be in bother. Negative equity will become a major problem.
This boom and bust approach in the property industry is not healthy, and I've got a dreadful feeling it's all going to end in tears.
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