02 Jun Will the bubble burst? Boost for homeowners as property prices soar by £1,500 a month
HOUSE prices will rocket by at least 12 per cent over the next 18 months, economists predicted last night.In news that will bring cheer to millions of homeowners, experts said the boom will last until 2016. They predicted property prices will continue to rise by at least five per cent over the rest of this year and could leap by a further seven per cent in 2015.
The confident forecast came after figures from the Land Registry yesterday showed no sign of a slowdown in the market.
Prices were up by 6.7 per cent year-on-year in April and by an incredible 17 per cent in London. In April alone, London prices were rising by an average £588 a day, the highest rate since calculations began in 1995.
The figures back up evidence that 2014 has seen one of the busiest starts to the year for the real estate market, according to Peter Rollings, chief executive officer of March & Parsons. He pointed out that limited housing stock and fierce competition for available properties means that in many parts of the country buyers are left with very little breathing space.
‘House price rises may have grabbed the headlines this year but double digit annual increases are not sustainable, and as the market self regulates itself, sellers and estate agents need to adjust their price expectations accordingly,’ he said.
He explained that it is a good sign that in the past six weeks the market has been steadier and prices have plateaued as more property has come onto the market. However demand continues to outweigh supply, in what is still a seller’s market.
This renaissance of supply is offering buyers more choice than they’ve enjoyed in recent months and is also good news for sellers searching for their onward purchase. That said, sellers should be prepared to adapt to these cooling conditions,’ he said.
‘We believe this slowdown in price growth is a healthy and organic development and would urge the government and Bank of England to allow the market to take its natural course. Ramping up interest rates or making mortgages more expensive would be a gross over reaction, which could harm the wider market outside of the capital, where the story is very different and recovery is only beginning to take shape,’ he added.
Nationwide, the price of the average property rose by £10,810 from £161,259 to £172,069. Based on these figures, millions can look forward to seeing almost £21,000 added to the value of their home over the next 18 months.
But according to separate figures from the Office for National Statistics, the average home with an outstanding mortgage is now worth £250,000. A 12 per cent rise would see £30,000 added to these values by 2016 – an increase of more than £1,500 a month.
That would mean property is rising in value at its fastest rate since 2007.
Economist Howard Archer said: “I can see prices rising by another five to six per cent over the rest of this year and by seven per cent overall in 2015.