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PWC warn house prices set to rise sharply <br/>

published on 15/07/2014  

Recent property price rises may be starting to moderate, but the UK housing market still offers plenty more room for longer-term growth as far as prices are concerned, according to big four accounting firm PwC. A study by PwC said UK house prices are likely to appreciate by an average of 35 per cent in the next six years as demand from buyers continue to outstrip the supply of housing coming onto the market, while average London prices will reach £500,000 by the end of this year. It estimates that the average price of a home in the UK could appreciate by around 8 per cent this year, with prices increasing by around 13 per cent in the capital in London. However, the pace of growth is set to slow over the next two to three years. “House prices across the UK are accelerating. We do, however, expect the pace to moderate, slowing to around 3.5 per cent between 2016 and 2020,” said William Zimmern, a PwC senior economist. He added, “We don’t believe the housing market is overheating at a national level yet, although evidence of a bubble in London is stronger.” PwC says that rising house prices could be a major factor causing interest rates to increase sooner rather than later. But in the longer term, however, it would like to see more measures introduced to boost housing supply. Zimmern said it was possible that the Bank of England could increase interest rates eightfold over the next few years in order to cool the housing market. “They could rise to around four per cent but in the longer term, measures to boost housing supply more directly should be the priority,” he concluded.