Forecasts released today by lettings firm KIS suggest property prices in the North East of England will rise by nearly double during the next fifteen years.
Predictions
According to the predictions, the average price of a home in the North East will rise to £277,558 by 2030-nearly double the cost of a property in the area today. Data suggests that the value of homes in the area will increase by an average of £76660 per year over the fifteen-year period, with year-on-year growth at 2.6%.[1]
If the forecasts are accurate, in five years, the cost of an average North East home will be £187,344, 14% more than today. In ten years, homes in the region will cost £229,655.[1]
Experts suggest that nationally, house values will rise at an increased rate of 19% to £341,455 by 2020 and 35% to £429,259 by 2025. National trends have seen prices accelerate further away from the North East over the past decade. In 2005, the average property price of a home in the North East was 30% cheaper than the national average. Now, that number has risen to 42%, with the gap expected to rise to 49% over the next fifteen years.[1]
Alarmingly, research from Oxford Economics earlier this year also predicted that the average cost of a home in the capital will exceed £1m by 2030.
Good news?
Ajay Jagota, founder and Managing Director of KIS, said, ‘if anything, these figures could be a little on the conservative side. Oxford Economics are predicting annual house price growth of roughly 2.6% a year over the next 15 years-but our research showed prices rising by 11% alone last year.’[1]
However, Jagota believes if the data is accurate, ‘this could be very good news for the North East. Wages are currently rising at 2.7% a year, so if house prices are rising at a slightly lower rate, that would see North East homes becoming progressively more affordable over the next 15 years.’
He went on to note, ‘what’s really striking is how national prices are accelerating away from us. In 1995, the typical North East home cost £19,000 less than the UK average. Today it costs £115,000 less. By 2030, the gulf will have widened to £260,000.’[1]
‘By 2030, the average London home will not only set you back over £1,000,000, it’ll cost you over £700,000 more than the average North East one.
If London wages can’t keep up with that surge, it is more than possible the North East could benefit from a ‘reverse brain drain’, where more and more people and businesses are unable to afford to base themselves in the capital and begin to look towards our region.’[1]
Concluding, Mr Jagota said, ‘this strengthens the case for increased devolution for the region, especially if it includes greater powers to develop our regional economy and infrastructure and to develop new housing to meet the growing need.’[1]
[1] http://www.propertyreporter.co.uk/property/north-east-house-prices-to-double-by-2030.html