With values predicted to rise eight per cent this year the £242,000 current cost of a typical home will be boosted £20,000, and a 5.5 per cent rise in 2015 will see a valuation of £276,000.In the next six years, house price inflation will see average vales at £328,000 by 2020 while the average property in London could be worth around £565,000, analysis by PwC in its latest UK Economic Outlook report found.However there are warnings of higher interest rates in a bid to prevent a property price bubble in the capital, and that typical mortgage deals could rise to around seven per cent.William Zimmern, senior economist, PwC, said: “House prices across the UK are accelerating in stark contrast to the generally weak prices seen outside of London until 12-18 months ago.”We do, however, expect the pace of house price growth to moderate over the next two to three years, slowing to around 3.5 per cent per annum between 2016 and 2020.
AN ORDINARY three-bedroom semi in the UK will have a price tag of £330,000 by the end of the decade, according to one of the world’s biggest finance firms.
The average price of a three-bedroom semi-detatched house will soar to around £300k by 2020 [GETTY]
“On balance, we don’t believe the housing market is overheating at a national level yet, although evidence of a bubble in the London market is stronger as borrowers are more stretched on average in the capital.
“Recent recommendations from the Bank of England’s Financial Policy Committee focused on restricting the proportion of new mortgages at high loan-to-income ratios and that seem sensible.
“Concerns around a possible bubble could be one aspect causing interest rates to rise sooner rather than later, and they could rise to around four per cent, but in the longer term, measures to boost housing supply more directly should be the priority.”
While soaring house prices are good news for homeowners, the younger generation is unanimous in its verdict that costs are too high.Of those aged 18 to 24, 100 per cent say property is too expensive putting homeownership now and in the future out of their reach, according to a survey by Hitachi Personal Finance.Gerald Grimes, managing director of the loan company, said: “News of the recent increases in house prices is bound to make younger people pessimistic about their ability to buy a home.”But the good news for borrowers is that average mortgage payments today are less than they were five years ago and significantly cheaper than they were in 2007 at the height of the boom.”Only three in ten people in the 35-44 age group – which covers the average age of a first time buyer – think house prices are too high. This shows that by the time people come to buy their first home their perception of the market is very different to that of the younger age group.”