House prices to rise £52,000 by 2021, economists predict

The average UK house price across the whole of 2017 will be £220,000, marking a £9,000 increase compared with 2016, according to the Centre for Economics and Business Research (Cebr).

By 2021, the average home is set to be worth around £272,000, its report predicts - a £52,000 increase compared with 2017.

Cebr expects property values to climb at a slower pace over the next couple of years as Brexit negotiations progress, with annual increases below 5%.

This compares with a 7.5% year-on-year increase in house prices recorded in 2016.

It expects UK property prices to grow by around 4.4% during 2017 - the slowest pace seen since 2013.

But from 2019, growth is expected to pick up, with an annual increase of 5.7% pencilled in for that year and increases of around 6% in 2020 and 2021.

Cebr said a shortage of suitable housing will continue to help push house prices upwards. At the top end of the market, those looking to sell can hope to benefit from a pick-up in demand from foreign property investors due to the low value of sterling, it said.

On the other hand, increased living costs from rising inflation, combined with stagnating wage growth, will squeeze consumers’ disposable incomes and dampen housing demand in 2017 and 2018, it predicted.

The property market is also still “reeling” from tax changes put in place “not expecting that the UK would find itself preparing to leave the European Union”, Cebr said.

Last April saw a stamp duty hike imposed on people buying second homes, including buy-to-let investors.

Cebr said changes to the tax regime which will further eat into landlords’ profits are expected to significantly reduce the number of private buy-to-let landlords in the market.