Residential property prices look set to increase by an average of £60,000 over the next five years, hitting more than £320,000 in 2020, according to Cebr, the Centre for Economics and Business Research.

The economic forecaster expects the average price of a home in the UK to reach £263,000 this year, up 5.6 per cent on last year, but believes that the market offers further room for growth of 3.5 per cent in 2016, with further annual price rises of in the region of 4 per cent in the four years that follow.

If accurate, these price hikes will take the average price of a UK home to £321,600 during 2020 – £58,600 more than the average residential property price in 2015, according to Cebr.

Nina Skero, CebrEconomist and main author of the report, believes that capital growth will be primarily fuelled by a growing “reduction in the number of properties being put on the market” as a result of low levels of housebuilding, as well as other factors such as an ageing population and the rising cost of moving up the property ladder.

He commented, “The price gap between a first-time home and a larger family home has skyrocketed in some regions, such as London, curbing activity in the housing market.

“For many, the rungs of the property ladder are moving further apart, making it impossible to upsize.”

Cebr’s forecast is supported by a new survey, conducted by Zoopla, which found that 92 per cent of homeowners across Britain expect property prices in their area to soar over the next six months.

Only around 5 per cent of homeowners surveyed believe prices in their area will fall in the next six months, while 3 per cent think they will stay flat, with no change.

Zoopla found that the East of England is the region of Britain where homeowners are most likely to predict price increases in the coming six months, with 97 per cent expecting values in their area to increase. Homeowners in London and the South East are almost as confident, with 96 per cent of homeowners there expecting prices to increase.

Property owners in Scotland were found to be the least confident about property prices rising, although the vast majority – 82 per cent – still expect to see prices appreciate.

Lawrence Hall (left), a spokesman for Zoopla, said, “While traditionally the estate agency market tends to take a break over Christmas in terms of completions and viewings, home owner confidence shows no sign of slowing down and many individuals use the end of the year as a landmark to evaluate how much their property has appreciated over the calendar year.
“The only slight chink in the armour is the fact that a sizeable number of people still feel securing a mortgage is becoming more difficult.”

Prospects for house price growth are supported in part by the fact that homes in England and Wales are at their most affordable in 13 years, as households benefit from rising incomes and lower cost of goods, new research from Hamptons International claims.

The estate agent’s latest Ability to Buy index increased by two per cent year-on-year in the second quarter to bring it to its highest level since the first quarter of 2002.

Hamptons’ Residential Researcher Director FionnualaEarley said, “Compared with last year, ability to buy is better everywhere in the country apart from London, where rising prices have outweighed the benefit of lower food prices, transport and utility bills and lower mortgage rates.”

Meanwhile, sales to first-time buyers rose in September, accounting for 29 per cent of all properties sold, thanks partly to better mortgage provision for first-time purchasers, according to a report published by the NAEA this week.

This is the highest proportion of sales to first-time buyers since May, when first-time buyers also accounted for 29 per cent of property transactions.

Mark Hayward (right), Managing Director at the NAEA, said: “We saw an average nine sales going through per branch in September, which means that for each branch, around three sales were made (to first-time buyers).”

Moving forward, 4.6 per cent, or 1.23 million, UK households plan to buy a property in the next year, according to a survey conducted by Markit and Ipsos MORI for Knight Frank.

“If all potential purchasers were to achieve a sale this would result in a slight increase in transaction levels compared to the previous 12 month period, underlying the fact that levels of demand across the market remain high,” said Oliver Knight (left) of Knight Frank Residential Research.