Middle-market house prices to catch up

Average house prices are set to top the £300,000 mark within six years as the middle of the market catches up with the luxury end, according to research published yesterday.

Average house prices are set to top the £300,000 mark within six years as the middle of the market catches up with the luxury end, according to research published yesterday.

Although experts in East Anglia say there will be no repeat of the 20pc rise experienced in the region in 2000, they predict that prices for “mainstream” and cheaper properties will rise while the market for luxury properties remains “stable”.

Research by the National Housing Federation said values will increase by about £20,000 from this year with average prices nationally climbing from £195,000 to £303,900 by 2012.

A study published on the same day by the Royal Institution of Chartered Surveyors (RICS) said a house price boom in London and the South East was distorting this picture as the north/south divide widens.

Louise de Soissons, director at Savills in Norwich, said he would be surprised if prices in Norfolk and north Suffolk rose significantly above inflation.

He added: “We deal predominantly with the top end of the market which traditionally is pretty stable and resilient.

Most Read

“Where you are seeing the change is in the mainstream market and particularly the lower end. Even taking that into account I would be surprised if we see significant increases and certainly not double figure percentage increases as is being suggested.”

The RICS study showed house prices rose in June despite continued rises in unemployment and volatile financial markets.

London and the South East recorded the sharpest house price rises in six and a half and four years respectively. The gap between prices in London and the rest of the country is the largest ever recorded by RICS.

London has lagged behind since 2002 but a strong financial services sector has created a mini-boom, as the rest of the country takes a breather.

Spokesman Ian Perry said: “A strong economic climate continues to encourage the housing market with rising unemployment doing little to discourage the consumer. Contrary to expectations, the World Cup and volatile financial markets have had little impact, a sign that the market remains healthy and consumer confidence is strong.

“Evidence suggests that the property market is once again seeing a north - south divide. A strong financial services sector has transformed London into a property rich 'city state'. Economic divisions used to be characterised by unemployment and economic decline but are now characterised by the difference in house prices. London has become a property kingdom created by finance.”