The price for an average property in the UK is set to increase by £44,000 over the next five years, despite any warnings “Project Fear” had spread pre-Brexit.
The average British property will gain some extra value every year until 2021, when it will be worth around £254,000, the Centre for Economics and Business Research (Cebr) has revealed.
The think-tank explained that activity is very likely to slow down slightly next year, but also said that this had already been dampened slightly due to the stamp duty hike for buy-to-let investors.
These forecasts are quite the opposite of ex-Chancellor Osborne’s rather negative assessment of the property future during the referendum campaign earlier this year.
At the time, Osborne forecast a drop in value of 10-18% by 2018.
Currently, house prices in the UK average at about £210,000 with expectations for a price increase of 6.9% across 2016.
The report then continues with a smaller increase of 2.6% for 2017, mainly due to the UK facing an economically tougher time, before going up again to 4% in 2018.
Three years later, by 2021, average prices are forecast to sit at £254,000, a total of £44,000 higher than it is now.
Cebr stated that activity in the UK property market had already slowed down prior to the country’s referendum in June.
For consumers, we expect rising inflation and increasing unemployment to squeeze disposable incomes.”
“Weaker business investment is likely to weigh additionally on economic growth. Taken together these factors will have a dampening effect on the housing market in the coming year.”
The report explained that whilst restrictions to immigration will weaken the demand for new homes, the same may happen to supply as 9% of workers in the UK’s construction industry were EU nationals.
Kay Daniel Neufeld, an economist at Cebr and the main author of the report, said:
If immigration is reduced drastically, pressures on house prices could ease in certain areas.”
“However, as the construction sector relies on immigrant labour skills, the UK might find it difficult to build the required number of houses to address the shortage we currently see in the market.”