House price to beat peak in 2014

Robyn Hall

April 3, 2013

Next year CEBR expects house prices to be 2.3% higher than in 2007 and predicts that the average home price will be £222,000 this year, 1.4% higher than in 2012.

CEBR said that in the short term, lacklustre wage growth, domestic banks ongoing recapitalisation efforts and Eurozone financial unrest are expected to subdue house price growth.

The forecaster said that in the medium term a strengthening economy will lead to rising wages while population growth is projected to outpace housing supply increases.

We predict these two market fundamentals will lead to accelerating house price growth over the medium term.

Daniel Solomon, CEBR economist, said: “By 2018, we expect the typical UK home will cost £267,000 – over 20% more than this year.

“Gradual wage and population increases will be the fundamental drivers of this medium-term trend.”

When the potential impact of the Help to Buy scheme is included CEBR estimates prices could rise by to 0.8% without having any appreciable impact on housing supply.

CEBR believes Help to Buy could lead to an additional 4,800 homes being built by 2015.

Solomon said: “We expect the Chancellor’s new Help to Buy scheme will push up house prices before it raises housing supply.

“This supply boost could provide a welcome route on to the housing ladder for a small number of aspiring homeowners.”

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