House prices are set to treble

THE average price of a house in London will be cost almost £600,000 in less than 20 years, an economics group has predicted. Homes in the capital now cost an average of £183,262. Price rises are set to continue, with the average house costing £595,164 in 2020, an annual gain of 6.76%.

The Centre for Economics and Business Research (CEBR) said the London housing market will see the biggest jump as property prices across the country look set to increase by an average of 6.24% a year between the first quarter of 2002 and 2020, raising average prices from £101,164 to £300,643.

In percentage terms people living in the east of England will see the greatest gains, with prices there rising by 6.99% a year to take the average cost of a property to £368,058.

Property will remain cheapest in the North-East, where average annual property price growth is forecast to be only 3.69%, and average house prices will reach £123,651 by 2020.

The CEBR said it had increased its forecast for average growth quite sharply from the figures it predicted last year. It said this was due to new forecasts from Government actuaries indicating much faster population growth than had previously been expected, as well as doubts over how much impact planning reforms will have on the property market.

The author of the report, Douglas McWilliams, said: 'The result of this will be to create a chronic housing shortage, which will force average house prices up faster than average earnings, especially in London and the South-East - good news for those already on the property ladder as they will see their house price increase in value. But for those with low incomes and those who have not yet purchased their first home, this will make the step on to the property ladder even more difficult, and will undoubtedly lead to an increase in the average age of the first-time buyer.'