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House prices set to increase 24% in five years

Knight Frank is predicting that house prices will increase by 24 per cent in the next five years.

In its UK housing market forecast for Q4 2013, published today, Knight Frank is predicting house price growth of 7 per cent both this year and again in 2014.

It predicts price growth will slow to 4 per cent in 2015 and 3 per cent in both 2017 and 2018.

The forecast follows Savills, the estate agents, which predicts house prices will rise by 25 per cent over the next five years.

Knight Frank expects prime central London to see a slower growth rate of 20 per cent over five years with 6.5 per cent this year and 4 per cent next year.

It predicts the market will stall in 2015 when there will be no increase in prime central London before picking up to 5 per cent growth in 2016, 2017 and 2018.

The property firm expects outer London to grow more strongly than prime central London as market dynamics change.

The report says “modest” improvement in homebuilding will not have any impact on pricing in the next few years as under-supply continues.

The study expects price growth to slow as the Help to Buy schemes come to an end in 2016 but predicts a stronger economy will be able to cope with a stimulus-free housing market.

Knight Frank global head of residential research Liam Bailey says: “For the first time in five years we can be broadly positive about the UK housing market.
 Price growth is encouraging transactions, contributing to labour mobility, and first-time buyers are able to access the market in a way they could not even 12 months ago. Importantly these improvements are not limited to London, they are spreading.

“There is however a flip-side to these improvements. Rising prices in the short term will limit longer term growth. The fact remains that pricing in the UK is high in historic terms, and while the Government can encourage activity over the next two to three years, it can not change the fundamentals surrounding market affordability, especially as low interest rates and Government interventions start to unwind.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. It worries me when you print meaningless twaddle like this. It’s a guess at best and a wild stab in the dark at worst.
    If I wanted to read fiction about the housing market I’d expect to find it in the Daily Mail or the Daily Express not in a serious professional magazine

  2. When I first saw this article, the opening lines were different to the ones now published and I hope they changed because of comments received. Phrases such as ‘house prices set to soar’ and ‘…predicting house prices will rocket’ certainly grabbed my attention, but the 24% over 5 years didn’t seem to excite me that much to be honest. That return equates to just 4.4%pa compound ! These are just guesses. Five years ago no one was predicting that the FTSE100 would be up 91.7% in 5 years time (13.90% pa compound) and even more interesting is the perception of the general public of what it has actually achieved over the last 5 years. Many clients still believe it is lower because of press/media coverage of the markets and the economy. When it comes to property though it seems predictions can be made and away we go again towards the next bubble. It’s a pity Chartered Surveyors and Estate Agents aren’t regulated like the financial adviser community. Talk about unlevel playing fields. Oh and they can sell those as well with a description like good drainage to one side!!

  3. Can we please ask the media not to fall into the property bubble trap yet again….?
    Just because an estate agent issues a press release with this babble doesn’t mean its worth reporting word for word…..
    As John Lacy says, gutter press need it to sell copy, MS certainly doesn’t. You can be objective you know!
    Whilst increases at ~4.5% per annum equate to about this figure, its somewhat misleading to bulk it all together….. where next “65% rise over 10 years”? That’ll really stir things up!

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