House prices to keep rising in the West Midlands
Average house prices in the West Midlands are on course to break the £200,000 barrier by the end of next year, says a new report.
Officials say it is a sign of the increasing strength in the region's economy, with growth expected to almost double this year.
Experts at leading accountancy firm PwC – formerly PricewaterhouseCoopers – say the recovery in the wider UK economy could see interest rates starting to rise as early as the end of this year.
While that might cause a slight slowdown in the housing market, as some families shy away from the prospect of higher mortgage repayments, PwC is still predicting average house prices in the West Midlands could hit £210,000 by the end of next year.
And they could rise as high as £256,000 by 2020
It is a reflection of how the UK housing market has leapt back into life over the past 12-18 months, with prices rising across the country.
At the moment house prices are expected to rise eight per cent in the West Midlands this year, up from £184,000 at the end of 2013.
Mark Smith, regional chairman at PwC in the Midlands, said: "House prices in the West Midlands are accelerating but we do expect this to moderate over the next two to three years, slowing to six per cent in 2015 and an average rate of around 4.2 per cent per anum between 2016 and 2020."
Meanwhile the region's economy is well on the road to recovery
Growth in the West Midlands is expected to pick up from 1.6 per cent in 2013 to around 3.1 per cent in 2014, in line with the rest of the UK.
Mr Smith, added: "These latest figures show the West Midlands economy is now gathering real momentum as business investment starts to pick up. The unemployment rate in the region has also fallen faster in 2014 than any other UK region, falling by 57,000 over the past year.
"In addition, inflation has fallen faster than expected recently, and we expect it to remain at or slightly below target in 2014-15. As a result, we expect the Monetary Policy Committee (the interest rate setting body of the Bank of England) to keep interest rates on hold in the short term but then to increase them gradually from late 2014 or early 2015 onwards, perhaps returning to around four per cent by 2020.
"While higher interest rates will help savers and reduce pension fund deficits, households need to bear in mind likely future interest rate rises in any decisions on mortgages or other longer term loans."
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