UK house prices to increase by 8 per cent over next three years

- Prime Central London will Continue to Outperform the Market with 22 per cent Rise -

Although values will fall marginally in 2012, UK house prices will start to rise again next year and could increase by as much as eight per cent over the next three years, CBRE revealed in its latest house price forecast. Prime central London will continue to outperform the wider housing market with values increasing by 6 per cent in 2012 and by a total of 22 per cent over the next three years.

Jennet Siebrits, Head of Residential Research, CBRE, said:

“Despite the market being characterised by monthly fluctuations, the longer-term outlook for the housing market is fairly static. We don’t expect it to pick up until the economy fundamentally improves. Low interest rates are continuing to stave off repossessions and forced sales, but a substantial proportion of would-be buyers remain unable to move. Ultimately, bank lending still needs to loosen further to spur on housing market activity.”

Buyers of homes over £2 million will face an additional £40,000 bill following the introduction of the 7 per cent rate of Stamp Duty Land Tax (SDLT). However, of more concern is the new 15 per cent SDLT rate for ‘non-natural persons’.

Jennet Siebrits said:

“Property prices in prime central London have increased by 30 per cent over the last two years, so the additional expense incurred by the introduction of the new 7 per cent rate has to be viewed within the context of the significant and ongoing price rises in high value homes.

“The new regulation designed to prevent overseas buyers avoiding SDLT could have unintended consequences as it also captures UK domiciled companies. However, it must be stressed that this only affects a small proportion of the market as transactions of homes over £2m only accounted for 0.25 per cent of the market last year across England and Wales.”