The average UK house price will rocket by 25 per cent over the next five years to more than £320,000, forecasts show.
The upbeat outlook represents a £60,000 boost to the value of a typical home.
It is the second time this year that the prediction has been revised upwards by the Centre for Economics and Business Research, one of the country’s most respected forecasters.
Fewer Homes For Sales
The increase is explained by the effect on the market of fewer homes being put up for sale.
Economist Nina Skero, author of the report, said: “A reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK.
“This is a result of low levels of housebuilding but also other factors such as an ageing population and the rising cost of moving up the property ladder.”
In the report, the research centre says the cost of the average home will hit a record high of £263,000 this year.
And it has revised its forecast for annual growth upwards from 4.7 per cent in June to 5.6 per cent this month – with even better to come.
Values are set to leap by a further 3.5 per cent in 2016 and 4.2 per cent in 2017.
Prices will continue to climb, it says, taking the average price of a UK property to £321,600 during 2020 – £58,600 more than the average house price this year.
Ms Skero added: “The price gap between a first-time home and a larger family home has skyrocketed in some regions, such as London, curbing activity in the housing market.
“For many, the rungs of the property ladder are moving further apart, making it impossible to upsize.”
Other housing market experts also predict further rises.
Stephen Noakes, of Lloyds Banking Group, said: “House price growth remains robust.
“Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand.”
He added: “Supply is highly restricted with the stock of homes available for sale falling further to new record lows.
“This combination of well-supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near-term.”
The research centre report also highlights how the price gaps between different property types are widening.
This leaves first-time buyers facing a harder task, and also makes it more difficult for those wishing to climb the property ladder.
Shortage Of New Homes Being Built
But last year just 140,000 were completed while construction began on 160,000 dwellings.
The centre’s forecast identifies several key drivers behind the UK’s seemingly never-ending property boom.
Many would-be sellers are determined to get the best prices for their properties and, with no sign of the top of the market being reached, are holding on to their homes.
Older homeowners are staying put and this also restricts the number of properties for sale.
It further highlights a substantial increase in the cost of moving up the property ladder and the expense of moving home.
Low levels of housebuilding also constrain the number of new builds being put up for sale and sold.
Ms Skero said more incentives should be offered, such as Stamp Duty exemption for older people to persuade them to put their homes on the market.
“As a low level of house building is only one of the causes behind the issue, exclusively addressing this matter as the new Housing and Planning Bill largely does, will not go far enough in controlling rising home prices,” she said.
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