Average London home will cost £500,000 by 2020, say economists

An average London home will cost half a million pounds by the end of the decade, leading economists have said.

According to a study released on Sunday evening by the Centre for Economic and Business Research (CEBR), the price of an average home will go up from £383,000 today to £500,000 within seven years.

This rise of about 30% will spell good news for existing home owners, but will make it even more difficult for first time buyers struggling to get a foot on the ladder.

“House prices will be driven by London’s comparatively rosy economic growth prospects, buoyed by IT, business and professional services,” said Daniel Solomon, CEBR economist and report author.

“Nevertheless, house price growth in London will remain notably slower than in the boom years before the financial crisis,” he added.

Part of the price inflation has been attributed to economic growth in London, which is expected to outstrip the rest of the country.

North East and Northern Ireland will be the worst off, with houses expected to go up just 2.3% and 6% by 2018. This contrasts to 24.8% for the South East and 25.7% for East of England.