Why are house prices set to soar until 2020 and what are the warnings?

One factor is shortage of homes for sale and some owners are unwilling to move for fear of not finding a new place.

17:16 10 April 2014

Experts agree that house prices are set to soar until 2020 as shortage of homes becomes a number one problem. This, together with high stamp duty, scares some owners of not finding a new place to live and as a result, they are unwilling to put their houses on the market. 

 

Royal Institution of Chartered Surveyor chief economist Simon Rubinsohn said: ‘It is going to be ever harder for many first-time buyers to conceive of ever owning their own home.’ 

 

‘It is a major concern that we are not seeing enough houses coming on to the market. For the market to operate effectively, we desperately need more homes in areas where people want to buy and want to live. Until this happens, we’re likely to see prices continue to increase.’

 

RICS published a report saying that house prices will increase from 2per cent a year in the North to 9.3per cent a year in London. 

 

That would put the cost of the average London home at £570,000 in 2020. The figure for the South East would be £315,000 and for the South West £280,000.

 

Because of this, IMF’s financial stability chief has called on British policy-makers to show vigilance over property prices to protect the consumers.