Scots house prices set for five year boom –Savills

The estate agents has cited the economic recovery that is spreading across the UK as reason for its prediction that the average Scottish property will cost £160,339 by the end up 2020 – 14.2 per cent more than current levels.

The projections come in the same week that the country’s largest mortgage lender revealed that growth in UK house prices sped up in the year to October.

The Halifax put the drive down to “improving economic conditions” as it showed prices rose at an annual pace of 9.7 per cent last month - up from 8.6 per cent in September.

During October itself, house prices rose by 1.1 per cent, following a decline of 0.9 per cent in the previous month.

The increase brought the average price of a flat or house across the country up to £205,240, a record high.

Last week, rival mortgage lender Nationwide said house prices rose by 3.9 per cent in October from a year earlier.

Property values were up by 0.6 per cent compared with September, the building society said, putting the cost of the average home at £196,807.

Savills, meanwhile, said that UK-wide, it expects property values will rise by an average of 17 per cent by the end of 2020, with the increase ranging from 21.6 per cent in the South East of England to 12 per cent in the North East of England over the coming five years.

Lucian Cook, residential research director at Savills, said: “Over the next five years, the economic recovery should spread geographically. This is likely to result in less London-centric price growth than we have become accustomed to.”

The pace of house price growth will depend on how quickly interest rates increase over the next five years. The slower the rates rise, the more capacity there is for house prices to go up, as the cost of mortgage borrowing remains relatively affordable.

Mr Cook said that as “appealing as that may sound to existing home owners”, there are risks that if house prices grow too strongly while interest rates stay low, home owners will face an even tighter squeeze on their finances when rates return to “normal” levels and the cost of their mortgage increases.

Annual house sales across Britain are expected to reach 1.3 million in 2020, compared with 1.2 million this year.

However, this will be well short of the “pre-crunch norm” of around 1.7 million house sales taking place a year, as some house-hunters struggle to come up with deposits, said the report.

Martin Ellis, Halifax housing economist, added: “Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015.

“Strengthening demand is filtering through into higher sales levels, although the ongoing shortage of supply is acting as a significant constraint on activity.”

He added that demand was likely to outstrip housing supply over the coming months, “maintaining upward pressure on house prices”.