South west house price growth due to outstrip the rest of UK

• Prices set to rise by 40 per cent to hit £310,000 in 2020

HOUSE prices in the south west of England are set to be the fastest rising across the UK between 2016 and 2019, according to research published today by BNP Paribas Real Estate.

The global real estate adviser forecast that house prices will increase by 40.2 per cent in the south west over the next four years to £310,589, sustained by rising household income and constrained supply.

This compares with estimated house prices of 36.1 per cent in the South East and 25.1 per cent in London over the same period.

Across the UK, house prices will increase on average by almost 27 per cent to over £250,000 by the end of the decade.

Adrian Owen, head of residential at BNP Paribas Real Estate, said: “The new homes market in the south west has generally seen an increase in confidence as demand for new homes continues to rise.

"The Chancellor’s announcement that Help to Buy will continue past 2016 to 2020 has served to strengthen this market, given that the majority of the volume of new homes sites rely upon these products to make up a significant proportion of sales.

“Rising prices have been matched by new buyer enquiries and the south west in particular is demonstrating a solid growth in transactions.

"Both regional and national house builders generally report increasing levels of new build transactions, and mortgage lending has returned to pre-2008 levels.

“While there are encouraging signs of growth in demand there is still evidence that supply is not keeping pace and prices are set to increase further as a result.”

Mr Owen also added: “Improving household finances will inevitably create excessive pressure on the market over the next 12 months.

"We expect prices to have risen by 4.5 per cent in 2015 and to rise by 4.4 per cent in 2016.

Over the next four years we expect the average house price to grow by close to seven per cent per annum, reflecting a period of ‘catch-up’ as real prices return to their long term trend.

“The disparity in prices across the regions of the UK continues to grow, with the North East, Scotland, Wales and Northern Ireland showing less ongoing demand. however, we expect the Midlands and the non-London south to play a degree of catch-up with London where, following its outperformance for so many years, prices are forecast to grow slightly below the national average.”