Lewisham and Waltham Forest tipped to record the highest five-year growth across the capital

It's more bad news for London's struggling first-time buyers, with huge demand for homes tipped to push prices even higher in districts previously considered affordable.

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Interactive map: predicted house price growth across London

Despite recent warnings of a housing bubble, house prices are set to rise even further across London over the next five years, according to a new forecast.

Two London boroughs - Waltham Forest and Lewisham - are set to experience the highest growth of up 20 per cent by 2020, says the report from estate agent Savills.

In east London, Waltham Forest - home to Leyton, Chingford and Walthamstow  - has seen some of the biggest growth because of a surge in demand from buyers priced out of more central locations.

South of the river in Lewisham, property prices are tipped to rise at a similar rate thanks to strong interest in popular areas such as Blackheath, Brockley and New Cross. Further investment by the council and plans for new-build homes are contributing to forecasted growth.



However, Lucian Cook, head of Savills residential research, warns that these predictions are largely dependent on the scale of interest rate rises during the next five years.

“If rates rise too quickly, mainstream house price growth will be quickly curtailed," he says.

"On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when rates do eventually increase."

In outer London suburbs, prices are expected to rise by an average of 17 per cent by 2020. 

This includes Barking and Dagenham, currently the cheapest borough with homes valued at an average of £318,000, along with Greenwich and Newham in the east, which have both seen some of the steepest house price rises over the past year. 

Even London's two "millionaire" boroughs, Kensington & Chelsea and Westminster, are predicted to grow by 15 per despite recently recording negative growth. Savills expects the slowdown to be short-lived while buyers get used to higher stamp duty rates, and with international interest expected to return to the market shortly.

In the so-called "wealth belts" where average house prices are already beyond £500,000, such as Islington in north London and Richmond in the south-west, growth is expected to be the slowest, yet is still tipped to rise by about 10 per cent.

Meanwhile, in the riverside borough of Southwark - and also in Hackney, now one of the most expensive boroughs in the capital and home to arty types and City slickers - redevelopment has sent prices rocketing. 

There's still room for 15 per cent growth in these two boroughs as prices catch up with prime central London and the City, which borders them both.

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