House prices set to soar by 20% in the next five years with average home costing almost £200,000
- Savills said it has upgraded its housing market forecast from a rise of 11.5 per cent by 2017 to a jump of 18.1 per cent
And gross mortgage lending rocketed to £15billion in June, a massive increase of 26 per cent
House prices will rise by nearly 20 per cent over the next five years with the cost of the average home reaching nearly £200,000, research revealed today.
Savills, the upmarket estate agency, said it has upgraded its housing market forecast from a rise of 11.5 per cent by 2017 to a jump of 18.1 per cent.
The research said ‘government intervention’ partly triggered the upgrade while critics warned the interventions are fuelling a house price boom but doing nothing to help lending to businesses.
House prices will rise by nearly 20 per cent over the next five years with the cost of the average home reaching nearly £200,000, research revealed today
Yesterday the Council of Mortgage Lenders said gross mortgage lending rocketed to £15billion in June, a massive increase of 26 per cent on the same month last year.
It is the highest monthly total since October 2008, the month that taxpayers were forced to bail out both Royal Bank of Scotland and Lloyds Banking Group as the crisis struck.
Millions of homeowners have never enjoyed cheaper mortgage deals, while the number of first-time buyers is rising sharply helping by loans which demand only a small deposit.
Savills predicts the average home, worth around £162,000 at the beginning of the year, will be worth £191,631 by the end of 2017, a rise of nearly £30,000 or 18.1 per cent.
While mortgage lending is rising, lending to businesses continues to fall.
Yesterday the Business Secretary Vince Cable said estimates show net lending by UK banks to small and medium-sized firms has been negative for 22 of 24 months to May.
Separate figures, from the Bank of England, also published yesterday, show lending to all businesses contracted by around £4.5billion between March and May.
Yesterday the Council of Mortgage Lenders said gross mortgage lending rocketed to £15billion in June, a massive increase of 26 per cent on the same month last year
It warned: ‘The annual rate of growth in this measure of the stock of lending to businesses has been negative for the past four years.’ Lord Oakeshott, a leading LibDem peer, slammed Funding for Lending, a Government scheme launched last
August, which allows banks to borrow cheap money if they maintain or increase lending to households or firms.
He said: ‘Funding for Lending is turning into a total disaster.
‘It is pouring fuel on the flames of an already over-heated housing market while doing nothing to help businesses.’ Howard Archer, chief UK economist at the consultancy IHS Global Insight, said: ‘The Funding for Lending Scheme continues to have very limited impact in supporting bank lending to companies.
‘At best, it appears that it may have stopped lending to businesses from falling more than it has.’
Lucian Cook, director of residential research at Savills, said: ‘A combination of low interest rates and stimulus measures means there is capacity for improved price growth over the next three years or so.’
The Government’s two Help to Buy schemes are also helping to fuel the housing market, pushing a home even further out of the reach of many workers on average salaries.
One of the Help to Buy schemes allows people to buy a new-build home with only a five per cent deposit.
The other Help to Buy, which will launch in January, allows anybody from a first-time buyer to a ‘second move’ to buy an old or new home for up to £600,000 with only a small deposit, but a Government guarantee on a further chunk of the loan.