UK house prices to rise by 20% by 2024

New research has predicted that UK house prices will rise by more than 20% by 2024.

Estate agent Savills has predicted that prices will rise by 20.4% in the next five years.

Rise

Average prices are expected to rise by 4% this year, but to stagnate in 2021 because of the economic effect of the coronavirus pandemic.

However, growth is expected to pick up again in 2022, rising by another 4%, and to accelerate to 6.5% in 2023 before slowing again to 4.5% in the final year.

Growth will be fastest in the North West if England, followed by Scotland, Yorkshire and Humber. The worst result of all is expected to be London with an increase of just 12.5% over the five years.

Outlook

A Savills spokesman said: “As a clearer picture emerges regarding the search for a vaccine, future requirements for social distancing or a second lockdown, as well as the pace and geography of the economic recovery and the government’s policy response – so the outlook for the housing market will inevitably change.

“With the prospect that economic forecasts will be downgraded over the coming weeks, we can be fairly confident that the current level of momentum in the market will be difficult to sustain through the remainder of the year, particularly as furloughing unwinds, despite the replacement Jobs Protection Scheme.

Focus

“Because of the underlying economic risks and the sheer volume of mortgage applications currently being submitted, there is evidence that lenders are seeking to focus their resources on low-risk lending.

“This means equity-rich buyers are driving a market which is more favourable to home movers than first-time buyers and cash as opposed to mortgaged buy-to-let investors. We expect this trend to continue over at least the next 12 months.”

Stamp duty

In a separate report the Land Registry has reported huge savings for buyers because of the stamp duty holiday.

As 85% of buyers paid no tax on their newly bought property the Treasury has missed out on £100 million in July and August.

Holiday

The holiday, introduced by Chancellor Rishi Sunak, means buyers will not have to pay any stamp duty land tax on the first £500,000 of a property’s value until next March next year.

Buyers in Southampton, Sheffield, Plymouth and Newcastle were among the biggest savers with 98% of sales falling below the price threshold.

Bank of Mum and Dad

More than half of recent buyers under 35 were able to make their purchase after receiving a gift from the Bank of Mum and Dad (BOMAD).

The average gift to first-time buyers was £19,000, but 21% told a Legal & General survey that they had received more than £30,000.

Unlikely

The survey also revealed that 71% of buyers would have been unlikely to make the purchase if they had not had help from family or friends and would have had to wait another four years before they could afford to do it on their own.

Legal & General CEO Nigel Wilson said: “While the Bank of Mum and Dad is playing a clear and present role for many buyers, it remains a symptom of a broken housing market. Thousands of people simply don’t have a Bank of Mum and Dad to rely on.

“For those that do, generous family members are still having to draw on retirement savings and rainy day funds even as the country experiences its most significant economic challenge since the Second World War.”