UK
house prices will increase by 19.3% over the next five years, but by only 10.4%
in London according to research from Savills.
Its Residential Property Focus said that despite more certainty
following the general election, the barriers to affordability remain access to
mortgage finance and the costs of ownership for first-time buyers.
As a result, a rise of just 2% in house prices is predicted
nationally this year.
The
report said that though transaction volumes and mortgage approvals slowed in
the months before May’s election, additional RICS research showed new buyer
enquiries have been falling since the middle of 2014.
Alongside this, a Bank of England study said additional
regulation on mortgage stress testing requirements in the event of an interest
rate rise had slowed lending and mortgage approvals.
Lucian Cook of Savills said: “This has limited, and will
continue to limit, access to home ownership. This creates a tension between the
bank’s desire to minimise risk in the housing market and politicians’ desire to
get people onto the housing ladder.”
Savills said average annual housing costs for the under-35s are
£8,999, double that of £4,400 per year for those over 50, and four times that
of the over-65s, at £2,000. In London, the average costs rises to £15,700.
Cook said that price growth remained inevitable in an
undersupplied market, and this had been bolstered by the expected lower
increase in interest rates. But while greater political certainty would provide
a platform for growth, mortgage regulation and the cost of ownership would
continue to restrain the market.