Daily Express – Tuesday 18 July 2006

HOUSE PRICES TO RISE BY 50%

Millions will see property values leap £20,000 a year

House prices are set to rocket by more than half within six years in a boom that will see the average cost of a home top £300,000.

The increase is great news for millions of home owners who will see record equity in their properties, with average prices climbing from £195,000 to £303,000.

Values will increase annually by around £20,000 from this year, according to the National Housing Federation.  In 2012 the typical home is likely to cost almost 10 times the predicted average annual salary.

But while owners can stand back and watch as the biggest investment of their lives soars in value, first time buyers already struggling to get on to the housing ladder will find it impossible to get a conventional 25 years mortgage.

That increases the likelihood of a radical overhaul of Britain’s mortgage industry, raising the spectre of Japanese-style 100 year loans.

David Orr, the federation’s chief executive, said: “Our report spells disaster for tomorrow’s first time buyers, who will find it increasingly difficult to afford a place of their own. “

“We are already in a house crisis and things are getting worse.  High house prices are already having a disastrous effect on local communities. “

“Over the next six years we’ll see home ownership being pushed further our to the reach of middle earners and even those on relatively high incomes.”

In Scotland, experts blame a combination of outdated planning laws and problems with connecting new developments to water and power supplies for 1,340 fewer new homes being built last year to meet demand.

Bruce Black, Executive Director of Homes for Scotland, which represents companies building 95% of new homes build for sale in Scotland, Said:  “New starts and completions may have fallen but demand hasn’t.  It is just another pointer to the failing planning system we have and the infrastructure problems that have been so well publicised. “

An Executive spokesman said: “We are taking action to address land supply issues, not least through the radical modernisation of the planning system.  We are pursuing a wide range of policies in our efforts to improve the functioning of the housing market.  Indeed, the Minister met a number of key players only this morning to discuss how those policies can be progressed further.”

Other property experts welcomed the projected rise in value while sympathising with the plight of would-be buyers.

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