House prices to rise by £52,000 over the next four years despite Brexit fears
Economists predict that the average house price will increase by 25 per cent by 2021
HOUSE prices will leap more than £50,000 higher by 2021 on average despite Brexit uncertainty, according to economists.
The average UK house price across the whole of 2017 will be £220,000, marking a £9,000 increase compared with 2016, according to the Centre for Economics and Business Research (Cebr).
By 2021, the average home is set to be worth around £272,000, its report predicts – a £52,000 increase compared with 2017.
Cebr expects property values to climb at a slower pace over the next couple of years as Brexit negotiations progress, with annual increases below 5 per cent. This compares with a 7.5 per cent year-on-year increase in house prices recorded in 2016.
It expects UK property prices to grow by around 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 pencilled in for that year and increases of around 6 per cent in 2020 and 2021.
Cebr said a shortage of suitable 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 property market is also still “reeling” from tax changes put in place “not expecting that the UK would find itself preparing to leave the European Union”, Cebr said.
Last April saw a stamp duty hike imposed on people buying second homes, including buy-to-let investors.
WHAT'S NEXT FOR HOUSE PRICES?
IN the months after the UK voted to leave the EU, house price growth has slowed but there hasn’t been a massive impact.
Some regions have fared better than others – especially those outside of London.
Many of the house price indexes are now showing growth in the midlands or other big cities in the UK, rather than the capital.
Read more about what might happen to house prices in our in-depth look into how Brexit will affect our finances.
Cebr said changes to the tax regime which will further eat into landlords’ profits are expected to significantly reduce the number of private buy-to-let landlords in the market.
Kay Daniel Neufeld, a Cebr economist and main author of the report, said: “Rising inflation and stagnating wage growth are expected to depress households’ spending power in the coming months.
“The worsening financial situation of households could easily have a knock-on effect on consumer confidence, suppressing housing demand in 2017 and 2018.
“Government interventions in the buy-to-let sector further sap demand out of the market. Starting in April, private buy-to-let investors will no longer be able to fully deduct mortgage interest payments from their tax bills, leaving them with lower net profits.”
Last week, Nationwide’s property index reported that house prices fell for the first time in almost two years in March.
It marked the annual rate of growth falling to a 19- month low.
We pay for your stories! Do you have a story for The Sun Online Money team? Email us at money@the-sun.co.uk or call 0207 78 24516