British house prices will rise a further 9 per cent next year after an expected 15 per cent run-up this year, according to forecasts published by the Nationwide Building Society.
Growth in prices is expected to be led next year by the north of the country, with London prices growing by a slower 6 per cent.
The 15 per cent rise in prices this year is above Nationwide's projection in December 2002 of a 10 per cent increase for prices in 2003.
Last year, British house prices surged 25 per cent. Since the last annual decline in house prices in 1995, the average British home has surged in value by 162.7 per cent, according to Nationwide figures.
Mortgage rates are at 20-year lows when measured on an inflation-adjusted, post-tax basis, and unemployment stands at a 28-year low, noted Mr Alex Bannister, Nationwide group economist.
This makes it no surprise that house prices increased by double digits yet again this year, he said, for the third straight year.
However, a continued rise in prices is expected to hit first-time buyers, who will find it difficult to afford the homes on offer, he said.
Falling disposable income growth is also expected to hit overall house price inflation, Mr Bannister said, noting that this year post-tax incomes are growing at the slowest pace since 1994.
AFP