House prices are forecasted to increase in the next five years by nearly £60,000 according to the Centre for Economics and Business Research (CEBR). The average house price in 2015 is expected to be 5.6% higher than in 2014. House prices in 2016 are forecasted to rise 3.5% in comparison to 2015, but it could be higher. There had been an expectation for the average to rise this year by only 3% to 5% and yet that will be low if forecasts are right.

By the year 2020, house prices are expected to rise to an average of £321,600, which is £58,600 more than the current average.

Much of the reason for the increase in the average house price is the strong demand due to the low interest rates and warnings of possible rate increases, but there is a lack of properties coming onto the market. Higher demand with low supply is pushing house prices to rise beyond previous expectations.

Because house prices are climbing upward, not only are hopeful first time buyers finding it hard to climb onto the property ladder, but hopeful home movers are finding it hard to upgrade.

Nina Skero, a CEBR economist, remarked, “A reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK. This is a result of low levels of housebuilding, but also other factors such as an ageing population and the rising cost of moving up the property ladder.

“The price gap between a first-time home and a larger family home has skyrocketed in some regions, such as London, curbing activity in the housing market. For many, the rungs of the property ladder are moving further apart, making it impossible to upsize.”

While demand is rising for mortgages, so is the demand for remortgages. Homeowners are seeking to secure a new deal before interest rates rise and they lose out on the current opportunity to save and get a long term fixed remortgage.