The price of a home will be about £40,000 higher in five years’ time, even though prices are expected to slow in the wake of the Brexit vote.
The Centre for Economics and Business Research (CEBR) said house prices will rise by 5.7 per cent this year, but growth will fall to 2.2 per cent next year. Earlier this year, annual house price growth across the UK was running as high as 8 per cent.
Taking into account the CEBR’s projections, the average house price in Britain could increase from £194,000 in 2016 to £234,000 in 2021 – a rise of £40,000.
Slower growth will partly come from the greater uncertainty that has hit the housing market while a deal with the European Union is negotiated after Britons voted to quit the single bloc last month.
However, a three percentage point stamp duty hike which came into force for buy-to-let investors in April is also causing the slowdown, according to the CEBR.
The organisation added that the top end of the London housing market, which has attracted strong interest from foreign investors in recent years, was “showing cracks” well before the referendum vote on 23 June.
In the capital, house prices are expected to drop by 5.6 per cent in 2017. This is because a relatively high share of its residents are non-UK nationals, while the finance sector is also
“Some of the global regions that many of London’s non-UK buyers come from, such as Russia and the Middle East, are experiencing economic turmoil and are not as able to invest,” said the report’s authors.
Beyond 2021, housing market developments will depend heavily on the immigration and economic policies the UK negotiates with the rest of the world, the CEBR added.
However, others in the property industry were feeling more optimistic about growth yesterday. The property listings website Rightmove reported robust profits and said it was confident of navigating a post-Brexit housing market.
The company said its operating profit for the first half of the year rose 21 per cent to £80.6m on revenues of £107.9m, an increase of 16 per cent.
Chief executive Nick McKittrick said: “It is too early to gauge the impact of the result of the EU referendum on housing transactions.”
He added that the website notched up 765 million website visits in the first six months of the year, up 15 per cent on last year.