Britain not in for property market crash, says bank

Woolwich, the British bank owned by Barclays, became the latest organisation to dismiss fears of a crash in the UK residential property market yesterday, forecasting that the average house price will in fact more than double over the next 20 years, to around a third of a million pounds.

According to a new study carried out by the Centre for Economics & Business Research (CEBR) on behalf of the Woolwich, the average price of a house in Britain will rise by 112 per cent to £333,000 by 2025.

It says the sharpest rises will continue in London and the South-east, where the percentage of properties worth less than £150,000 will dive from 45 per cent now, to 15 per cent in 20 years. With the report also forecasting that earnings will keep pace with house-price rises, its says that getting a foot on the property ladder is unlikely to be much easier for first-time buyers than it is today.

However, it believes that an increase in the number of starter homes available could be a major factor in helping first-timers into the market.

It predicts first-time buyers will be best off in the West Midlands by 2025, where they will still be able to afford up to 60 per cent of the housing stock. In London, however, it predicts they will be able to afford just 15 per cent.

The report also predicts that different generations of families will buy together. This, the CEBR predicts, will see the housing stock split between compact dwellings for first-time buyers and larger properties.

It adds that the smaller properties will be without luxuries such as garages and gardens.

Andy Gray, the head of mortgages for the Woolwich, says: "Whilst the future looks sunnier for first-time buyers, it's increasingly looking like they won't have a garden to enjoy it in."Halifax also said that nearly one-third of private dwellings do not meet basic standards of "decent" accommodation according to the English House Condition Survey.

The bank said that if all the relevant repairs were made to bring Britain's ailing housing stock up to scratch, homeowners would be facing a collective bill of some £48bn.

- INDEPENDENT