19.5% capital growth forecast for UK property

19.5% capital growth forecast for UK property

Property prices are expected to increase by £60,000 in the next five years, as low supply continues to be met with huge demand.

Summary:

  • Strong levels of capital growth for UK property investors are expected over the next five years
  • The average property price is expected to rise by £60,000 by 2020, as low levels of supply coming onto the market struggles to meet soaring demand
  • Interest for UK real estate among institutional investors is currently high in areas of strong economic growth

UK property has a long established track record for capital growth, and a new economic forecast suggests that much more is on the way in the next five years.

The average property price in Britain is expected to rise £60,000 by 2020, according to CEBR (Centre for Economics and Business Research), an increase that will see asking prices reach £320,000.

This year prices are on course to be 5.6% higher than they were in 2014, with the average price hitting a record high of £263,000 in 2015. CEBR predict that prices will grow by a further 3.5% in 2016, before accelerating by 4% in each of the four years after that.

For investors, this would mean that the average property bought in the UK today would be worth 19.5% more by 2020.

The growth is being attributed to a lack of supply coming onto the property market, while demand for real estate from buyers in the owner-occupied sector and investors in the private rented sector remains feverous.

“A reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK, said Nina Skero, CEBR Economist and main author of the report. “This is a result of low levels of house building, but also other factors such as an ageing population and the rising cost of moving up the property ladder.”

2015 has shown there is the possibility of investors achieving much higher returns than average predictions. For example strict planning laws and low supply led Savills to name York as the UK city with the strongest capital growth, with the few investment opportunities that become available here often acquired quickly.

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