Housing market 'will rise and rise'
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Your support makes all the difference.House prices will have risen so much by 2020 that homeowners will be able to take a year off work on full pay funded by the equity in their property, claims a report from the Centre for Economic and Business Research.
The report found that house prices look set to continue rising at a faster rate than earnings over the next two decades, increasing by an average of 5.2 per cent a year. The CEBR predicts this will lead to a "significant rise" in the number of people tapping into the wealth accumulated in their property through equity-release schemes.
At present, the average homeowner has an outstanding mortgage of £55,000 on a property worth £114,500, around 48 per cent of their property's value. But the CEBR estimates that by 2020 the average home will be worth £279,900, while the average outstanding mortgage will have increased to only £99,000 or around 35 per cent of the property's value.
The CEBR said this meant the average homeowner could unlock £35,000 from their home, the equivalent in 2020 of a year's average earnings, and still have an outstanding mortgage of less than 48 per cent of their home's value.
Mark Pragnell, managing director of the CEBR, said: "Although the housing market will slow appreciably over the next few months, residential property remains an excellent investment.
"Because we fail to build houses fast enough to meet rising demand, we can expect a return to relatively high rates of house price inflation when consumer confidence and the economy pick up."
Recent research from the Woolwich has indicated that homeowners' confidence in the property market fell last month for the fifth month in a row. Just 50 per cent of the homeowners interviewed told researchers they expected the value of their property to continue increasing, compared with 53 per cent in February.
Andy Gray, head of lending at the Woolwich, said: "Homeowners are becoming increasingly aware that the housing market boom is coming to an end."
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