UK property prices set to soar by 30%
Says Office for Budget Responsibility
UK residential property prices could increase sharply over the next five years, fuelled by a rise in the number of savers choosing to invest in property rather than taking annuity.
The forecast comes from the Office for Budget Responsibility (OBR), following the changes announced in George Osborne’s latest Budget which means that people will not be forced to take an annuity when they retire and instead they can choose to invest their money as they wish.
Many people are expected to use their pension pot to invest in property, rather than in currently poorly performing pensions, driving up UK property prices in the process.
The OBR has revised its forecast for UK residential property price growth in the next five years from 27% up to 30.8%.
According to the Office for Budget Responsibility forecast, anticipated UK residential property price growth is expected to be:
- 8.6% in 2014/2015
- 7.4% in 2015/2016
- 4.3% in 2016/2017
- 3.7% in 2017/2018
- 3.7% in 2018/2019.
The predictions are the OBR’s best guess, they are not accurate in any way shape or form and should be used as a guide only. These are not fact, just speculation.
The OBR are supposed to be an independent fiscal body, however, they estimate that by the end of their forecast period, UK property prices should be just 0.5% below their pre-crisis peak, and the property price to income ratio is estimated to reach 2.3% below its pre-crisis peak.
The OBR also expects transaction volumes will increase at a faster pace than originally forecast over the coming five years. Estimating 1.28 Million housing transactions in 2014/2015, some 6% higher than the previous OBR forecast in December 2013.
The OBR also predict that Stamp Duty receipts will rise 90% over the next four years from £9.5 Billion (GBP) in 2013-14 to £18.1 Billion (GBP) in 2018-19.
The OBR report said: “House prices have continued to accelerate since our December forecast with annual growth reaching 5.5 % in December 2013. We expect house prices to peak earlier than in our December forecast at 9.2% in the 3rd quarter of 2014, with prices rising by around 30% by 2018-19.”
Property price growth is currently being led by London where even large estate agency groups like Savills forecast property values to surge by almost a quarter over the next five years.
According to a five-year outlook recently published by Savills, a number of risks to the prime property markets, such as Eurozone default, have receded over the past two years and Inner London boroughs could see a growth of 23.1%, and property prices in other areas of the capital could also rise by 22.7%.
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