House prices in the UK have reached a record high after Cebr forecasted that a typical house in the UK is expected to cost £225,000 in 2013, 2.9% higher than in 2012.

London’s house price growth is expected to be 6.9% in 2013, driven mainly by the fundamental fact that people want to live in the capital with its employment and cultural opportunities.

Daniel Solomon, Cebr Economist, said: “Government support and an improving economic climate will provide an invigorating shot in the arm for the housing market over the coming years.

“This is not a case of houses being built on the sand. The housing market recovery we are seeing rests on firm economic and demographic foundations – at least for now. Talk of a house price bubble is premature.”

The main reasons cited by Cebr for the unlikely advent of a housing bubble are a slowly recovering economy, the domestic population’s need for homes, slow supply growth and improving credit availability which are all supporting house prices.

With the housing market recovery firmly established in London and the South East, where house prices are forecast to rise by 43.5% and 27.7% respectively over 2013-18, the recovery is now spreading beyond these regions. In the East of England and Scotland house prices are forecast to rise by 27.6% and 27.5% respectively over 2013-18 and in Northern Ireland, where house prices have halved since their Q3 2007 peak, there are signs of life. House price falls in Northern Ireland have been slowing since early 2011 and house prices there posted an annual gain in Q2 2013 for the first time since Q1 2008. 

Solomon said: “Northern Irish house prices have recently posted their first annual gain in years and the housing market recovery is finally moving beyond London and the South East. This should make home owners up and down the country feel that bit wealthier, supporting consumer confidence.”