South West house prices bubble warning after predictions of huge increases
10-28-2015
By Lyn Barton
There have been predictions of huge increases in property values
According to the latest forecast, in the next five years the average UK house price will leap by over £60,000 to £320,000.
The Cebr (the Centre for Economics and Business Research) said demand is outstripping supply pushing up prices and encouraging sellers to ask the highest rates.
But Richard Copus, Devon spokesman for the National Association of Estate Agents, warned that the local market was very different from that in London and Home Counties.
"It is dangerous and it is irresponsible to think that the market in the Westcountry is the same as London and the Home Counties.
"Here the market is steady and stable," said Mr Copus, a director of Wood's Estate Agents.
"There is a rise of about 1 to 1.5% but nothing like the 5% surrounding London.
"The danger is that people are talking up the market and that the bubble will burst."
The Cebr said in its forecast that house prices in 2015 are set to be 5.6% higher compared with average prices across 2014 – and the average UK property value will stand at a record high of £263,000 this year.
Property prices are predicted to continue their upward march in the years ahead.
Prices are expected to be 3.5% higher in 2016 than they were this year, with further annual increases of around 4% in the four years that follow.
Andy Goundry, National Association of Estate Agents spokesman for Cornwall, said it was vital local expectations were not skewed to unrealistic proportions.
"There is always a danger that we could end up talking up house prices and in the end the bubble will burst again.
"That's not we want. We want a good, steady progression," said Mr Goundry, of Goundry's Estate Agents.
"However, I do think that general affordability issues and underlying economic factors will stop that from happening."
The Cebr said that the rungs of the property ladder are also moving further apart, making it harder for people to trade up to a bigger home as the cost has "skyrocketed".
This is terrible news for young people, particularly in rural areas where house prices are already unaffordable.
The Countryside Alliance said many rural villages were in danger of becoming retirement zones with no long term future.
Sarah Lee, head of policy at the Countryside Alliance, warned a lack of affordable homes "creates a vicious cycle which if not halted leads to the break-up of communities, a loss of services and results in villages that have no long-term future."
Current housebuilding plans are not enough on their own to control rising house prices, Cebr said.
However, a spokesman for the Department for Communities and Local Government spokesman said it was determined home ownership was not an unaffordable dream
He said housebuilding had been brought back from its lowest levels since the 1920s and "over one million permissions have been granted for new homes and almost 800,000 homes delivered since the end of 2009."