House prices set to soar by 2020

HOUSE PRICES are set to soar over the next five years, with Yorkshire and the Humber seeing the biggest increase in the north of England.

Photo: Dominic Lipinski/PA Wire

New predictions by Savills suggest property values will rise by an average of 17 per cent across the UK by the end of 2020, with a rise of 14.2 per cent in Yorkshire and the Humber.

The strongest increases are predicted for the south east and south west, at almost 22 per cent and 20 per cent respectively, but the rise for Yorkshire almost matches that of London, at 15.3 per cent, and out-performs neighbouring regions the north east (12 per cent) and north west (13.7 per cent).

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The estimate suggests the average house price in Yorkshire will rise more than £20,000 to £166,359 in 2020 - compared to £145,673 today, based on figures from the Nationwide Building Society. The average price of a house in the UK as a whole will be £229,007 in five years.

Lucian Cook, director of residential research at Savills, said: “Over the next five years, the economic recovery should spread geographically.

“This is likely to result in much less London-centric price growth than we have become accustomed to.”

The pace of house price growth will depend on how quickly interest rates increase over the coming five years.

The slower interest rates rise, the more capacity there is for house prices to go up, as the cost of mortgage borrowing remains relatively affordable.

Mr Cook said that as “appealing as that may sound to existing home owners”, there are risks that if house prices grow too strongly while interest rates stay low, home owners will face an even tighter squeeze on their finances when rates return to “normal” levels and the cost of their mortgage increases.

Annual house sales across the country are expected to reach 1.3 million in 2020, compared with just over 1.2 million this year.

This will be well short of the “pre-crunch norm” of around 1.7 million house sales taking place a year, as house hunters struggle to come up with a large enough deposit to buy a home, the report said.

Meanwhile, research from Halifax shows house prices rose by 9.7 per cent year-on-year in October to reach a record high of £205,240.

The growth accelerated from 8.6 per cent in September and marks the biggest annual increase in UK property values since August last year.