Currently the average London house is worth £383,000, according to the Centre for Economics and Business Research (CEBR), but a tight housing market will boost this to £500,000 by 2020, the think tank says.
And this rapid growth will be shared with much of the surrounding region, the CEBR predicts, with house prices across the South East shooting up by 24.8 per cent between now and 2018 – compared to growth of just 2.3 per cent in the worst performing UK region, the North East.
Prices in the East will race ahead even faster than the South East, the CEBR thinks, surging 25.7 per cent by 2018, but Northern Ireland prices will grow just six per cent, dragged down by the struggling housing market in its southern neighbour.
The CEBR put the capital’s solid forecast down to strong flows of skilled immigration, a predominance of competitive service sector companies and links with booming emerging economies. But CEBR economist Daniel Solomon warned that even though growth would be robust, it would not match up to the pre-slump expansion.
“House price rises will be driven by London’s comparatively rosy economic growth prospects, buoyed by IT, business and professional services,” Solomon said. “Nevertheless, house price growth in London will remain notably slower than in the boom years before the financial crisis.”