Stagnant homes market in Devon and Cornwall is set for an upturn
House prices in the South West could rise by between 10% and 30% in the next four years, industry experts predict, as the decline in the homes market undergoes a significant improvement.
Despite current falls in the value of property, research by BNP Paribas Real Estate suggests a cumulative increase of an incredible 29% by the end of 2016.
Local property expert Richard Copus was much more cautious but suggested a price rise across the region’s property market was certainly possible. However he warned against making too firm predictions, given the volatility of the economy.
Mr Copus, spokesman for the National Association of Estate Agents in Devon, said 10% growth in five years’ time was a more realistic figure.
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BNP Paribas said housing in the South West has “performed well” compared to many other areas over the last five years giving cause for optimism for home-owners.
Their forecast comes in the company’s recently published Housing and The Economy report pulled together by Professor Patrick Minford, a former economics adviser to Margaret Thatcher and current Professor of Economics at Cardiff Business School.
He said across Britain the overall long-term picture for house prices was also positive with 24% growth expected between now and 2016 – five percentage points down on the growth expected in the South West.
Nationally the housing market saw a 1.1% drop in growth this year following last year’s marginal fall of -0.2%.
Next year is looking more positive, however, with a forecast growth nationally of 0.9%, said the report’s authors.
Peter White, head of BNP Paribas’ Bristol office said the South West region’s housing market was doing particularly well. “The South West housing market has performed well over the last five years and outside London it is the second best performing region, behind the South East,” he said.
“Over the last five years, South West house prices have fallen -0.1% per annum compared to -0.2% per annum in the UK.
“Looking at the five-year forecast on a year-by-year basis, next year will be a pivotal year for the region’s housing market.”
“After two years of falling house prices, 2013 will mark the return to growth with prices forecast to rise 0.4%.
“House prices will then continue to rise year-on-year until 2016.
“When comparing forecast South West house price growth against other regions across the country, the outlook for the South West can be considered relatively upbeat.”
Other industry insiders agreed a lack of available housing across the region had helped to keep prices relatively stable.
Richard Donnell, director of research at Hometrack which regularly asks 1,500 estate agents and surveyors across the country about achievable selling prices, said the current ease-up in South West prices was not as bad as last year.
He said: “The slowdown in the housing market over the final half of 2012 has been less pronounced than that seen over 2011, despite pressure on household incomes.”
Mr Donnell pointed to recent figures released by the Council of Mortgage Lenders (CML) showing lending has increased, which he said reflected lenders offering more competitive mortgage deals as a result of a multi-billion-pound Government scheme launched in August to kick-start lending.
He said he expected to see a “clearer picture” of the impact of the scheme to develop next year.
However, Mr Copus was sceptical of the cumulative 29% growth, forecast by 2016.
He said: “Nobody can forecast how house prices are going to rise over a five-year period – you may as well look into a crystal ball.
“I agree that in two years’ time we might see an increase of 1% to 2% after prices have stabilised.
“But only a fabulous economic boom would see house prices increase substantially again.”
High demand and a shortage of property is helping to drive up prices