Average house prices in England and Wales are set to increase by 30 per cent in the next five years, with the national forecast reinforcing the North/South divide, according to forecasting from Rightmove and Oxford Economics.
While prices in London are set to rise by almost 33 per cent, the real beneficiary of the recent capital boom will be the south east, forecast to increase by 37 per cent by 2019.
Meanwhile, the North West will be the slowest riser according to the forecast, although the region’s house prices are still set to go up by 24 per cent.
The predictions are based on property and economic data rather than opinion and short-term market factors, taking into account both asking and sold prices, surveyor valuations and analytics from the Oxford Economics’ global, industry and regional forecasting models.
The majority of fastest performing areas are all within easy commuting distance of London – towns such as Southampton (+43 per cent), Luton (+41 per cent) and Brighton (+41 per cent) – with the home counties and outer boroughs benefiting from the ripple effect, alongside the brighter economic picture.
Prices in the capital itself are forecast to rise at a slower rate than the south east and East Anglia, with prime central London having a period of much slower growth after the increases this year.
West London is predicted to be caught in the prime London slowdown, with a modest rise of 14 per cent bringing its potential for future growth in line with the slower northern cities of Carlisle (+17 per cent) and Manchester (+19 per cent).
Miles Shipside, Rightmove’s director and housing market analyst, said: “Understanding the path of future house price growth is a key element of UK economic strategy and decision making, and our data driven forecasts contain insight not previously available from other commentators or the government’s own forecasts produced by the Office for Budget Responsibility.”
Separately, Reeds Rains and Your Move estate agents data showed that house prices up just 2 per cent a year since the crisis, with the south west becoming only the fourth region where prices exceed their pre-recession peak.
David Newnes, director of Reeds Rains and Your Move, commented: “For six regions of the UK, average property prices achieved on completion are yet to match their pre-crisis score – and a North/South divide in the field remains evident in the race back from the debris of the financial crash.
“Average house prices on sales completion in the South West set a new record in August, surpassing their October 2007 peak for the first time. This makes it the fourth region after London, the South East and East Anglia to scramble out from under the shadow of the financial crisis.”
September saw the lowest monthly increase in property prices in 2014, as a new spell of market adjustment set in for the autumn, according to the estate agent group.
“But while price growth dulls, activity in the market is still vibrant, and total house sales completions are up 16 per cent year-on-year in September,” stated Mr Newnes. “While the market adapts to a mellower beat, schemes like Help to Buy and an accessible lending environment are essential to ensure that confidence isn’t silenced, and activity continues to sing.”
peter.walker@ft.com
