HOUSE PRICES TO SOAR 25%

Massive increase in values over 4 years

HOUSE prices are set to rocket over the next four years as the UK economy enjoys a Brexit bounce, according to new figures.

Confidence in the property market is expected to be strong as values rise by an average of £52,000 – almost a quarter – by 2021.

A combination of a shortage of housing, better mortgage deals and the low value of sterling will fuel the increase, say experts.

The average cost of a home by the end of 2017 is expected to be £220,000, marking a £9,000 increase compared with 2016, according to the Centre for Economics and Business Research.

By 2021 the same property is estimated to be worth around £272,000, a rise of 23.6 per cent.

Estate agents also predict rises and say the property market “seems to be Brexit-proof”.

Economist and main author of the report, Kay Daniel Neufeld, said: “Already towards the end of 2016 indicators pointed to a stabilisation in the housing market, a trend that has continued in the first months of 2017.

“Transaction numbers are slowly recovering

from the introduction of a stamp duty surcharge on second homes in April 2016, which has led to considerable distortions in the market. Mortgage approvals are nearing postcrisis heights, boosted by low interest rates and favourable borrowing conditions.”

The Centre for Economics and Business Research expects property values to climb at a slower pace over the next couple of years as Brexit negotiations progress, with annual increases below five per cent.

This compares with a 7.5 per cent year-on-year house price increase recorded in 2016.

It expects UK property prices to grow by about 4.4 per cent during 2017 – the slowest pace seen since 2013. But from 2019, growth is expected to pick up, with an annual increase of 5.7 per cent, then six per cent in 2020 and also 2021.

The research said a shortage of housing will continue to help push house prices upwards.

At the top end of the market, those looking to sell can hope to benefit from a pick-up in demand from foreign property investors due to the low value of sterling, it said.

The data proves the resilience of the post-Brexit property market despite political turmoil and higher stamp duty bills, experts said.

Thrilled

Alex Gosling, CEO of online estate agents HouseSimple, predicted even further price rises. He said: “The UK property market seems to be Brexitproof. It has coped remarkably well with the economic turmoil in the months following the vote to leave the EU.”

He added: “House prices are still being supported by a lack of property stock and although buyers are taking longer before committing, now that Article 50 has been triggered, any reservations about making a purchase may ease. It wouldn’t be at all surprising if house price growth beats expectations this year.”

Shaun Church, director at mortgage brokers Private Finance, added: “Homeowners will be thrilled to hear that house price growth isn’t expected to be slowed down by Brexit, particularly as growth is currently relatively subdued compared to recent years.

“Rising property prices mean homeowners can re-mortgage to a more affordable deal as they fall into a lower loan-to-value bracket. It’s a good sign that consumer demand for housing will keep the wheels of the property market turning, despite the uncertainty of Brexit.”

Figures for the first quarter of this year reveal mortgage approvals, a leading indicator for property transactions, have recovered from their mid-2016 low and remain on a stable level at just under 70,000 per month.

This is very close to the high of 74,000 seen in early 2014.

Borrowing continues to benefit from low mortgage costs after interest rates were cut to 0.25 per cent after the Brexit vote.

But rising living costs from inflation and stagnating wage growth will squeeze incomes and dampen housing demand in 2017 and 2018, it is predicted.