The Centre for Economics and Business Research (CEBR) predicts that house prices will rise by around 25 per cent over the coming five years.
London homes could average more than half a million pounds by 2018, the agency predicts.
These recent forecasts will raise even more concerns about the longer¬-term effects of the Government’s Help to Buy scheme.
However, a spokesperson for the CEBR has said that the Help to Buy scheme has provided a boost to the market. And this is unlikely to cause a housing “bubble” in the short term, according them, as a housing shortage still exists.
The CEBR thinks the housing market recovery rests on a solid economic base. Even the London house price growth expectations of around a 6.9 per cent increase in the current year, driven by the buoyancy of the London economy and the fact that people want to live in and invest in the capital, a leading world city cultural centre, is based on solid ground, according to them.
The prediction from CEBR is that by 2018 the average UK price will increase by 23.7 per cent to a record high of £278,000. In London, this average price is likely to be close to £550,000, an increase of 43.5 per cent by 2018.
All this is supported by Bank of Eng¬land numbers showing mortgage approvals reaching their highest level for over five years.
However, these predictions must be taken in the light of other commentator’s views that a “bubble” could easily be the end result of the second stage of the Help to Buy scheme, coming on stream shortly.
However, some lenders have said they will not participate in the scheme and it has been said there could still be a correction if the recent pick-up in the economy stalls, and with earnings still falling in some sectors, house prices are already high.