House prices are set to rise by more than a fifth over the next five years, with the largest rises coming in the South East and East of England as growth ripples out from London, according to estate agent Savills.
The firm forecast to an average rise of 17% by the end of 2020, suggesting house prices will rise from £205,000 today to around £240,000.
The South and East of England should benefit from the ripple effect of house hunters seeking more affordable property away from London.
Savills predicts prices will increase 21.6% in the South East and 20% in the East of England.
London is expected to underperform its hinterland, with average growth of 15.3% forecast over the next five years.
Walthamstow and Lewisham are expected to show the strongest growth, outperforming areas such as Hammersmith and Fulham, and Richmond.
It said the pace of house price growth will depend on interest rates.
Lucian Cook, head of Savills residential research, said: “If rates rise too quickly mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise.
“That risk has been mitigated by recent mortgage regulation which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past 10 years.”
