Will The Average Sunderland Home Really Be Worth £172,000 in 2021?

A new report from The Centre for Economics and Business Research (CEBR) has predicted that while property values are expected to show weaker growth for the rest of 2016 and into 2017, the average price of a UK home will still be around £40,000 more in five years' time - despite the uncertainty caused by the Brexit vote

Click here for the Daily Telegraph article discussing this report http://www.telegraph.co.uk/business/2016/07/28/house-prices-to-rise-40000-in-the-next-five-years-despite-eu-tre/



If this forecast does come true and such an increase occurred in Sunderland, this would see the average price of a Sunderland house rising from £132,720 to £172,720 in 2021

Of course the average price in Sunderland is much lower than the UK average house price (£194,000) so it would make sense to calculate the potential increase predicted in this report in proportion to Sunderland figures

At £132,720 the average price of a Sunderland house is 68.4% of the UK average house price, so applying 68.4% of the £40,000 predicted increase would still see the average Sunderland property price increase by £27,365 to £160,085 by 2021

That would still represent an increase of 21% over the 5 year period

An increase in house prices is all well and good as long as people can still afford them...

The average Sunderland salary is £20,592 giving an affordability ratio (the average house price divided by the average salary) of 6.4

To maintain this ratio the average Sunderland salary would need to increase from the current £20,592 to £24,916 in 2021

And what about rents? The average rent (discounting student properties & HMO's) in Sunderland is around £525pcm and if we were to assume that rents rose in line with the above, this would increase the average monthly rent to £635pcm 

It could be argued that rents may increase over the next 5 years even without any house price or wage inflation stimulus as Landlords attempt to offset the increasing 'Clause 24' tax burden which will be phased in over the next 4 years

Ultimately the recent decision to exit the EU and the political fallout that has arisen following this has created a great deal more uncertainty about both the housing market and the wider economy, however it is encouraging to see a report from a respected source that suggests a positive outlook for the housing market post-Brexit


If you would like to discuss any aspect of the Sunderland property market please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com