Gloomy forecast for house price recovery


The recent suggestions of a recovery in the UK housing market are being called a “false dawn” in a new report from the consultancy firm PricewaterhouseCoopers (PWC), which says that house prices will continue to fall for at least the next 18 months. And once property prices do start to level off, it could be another decade before they return to levels last seen in 2008.


[UKPRwire, Mon Jul 20 2009] The recent suggestions of a recovery in the UK housing market are being called a “false dawn” in a new report from the consultancy firm PricewaterhouseCoopers (PWC), which says that house prices will continue to fall for at least the next 18 months. And once property prices do start to level off, it could be another decade before they return to levels last seen in 2008.

This will come as depressing news to homeowners, investors and prospective vendors alike, especially following the spate of more encouraging news over the last few weeks regarding house prices and expectations, which many had hopefully interpreted as a sign that the worst of the slump was over. The report foresees prices falling by a further 5%-10%.

“After the positive signs of prices steadying last month, sellers who had been biding their time in putting their property on the market perhaps got overly optimistic,” said Lawrence Smith of Decision Homebuyers. “It appears to have been no more than a blip in the downward trend of prices, which is projected to continue for another year and a half and then start to improve very gradually and slowly.”

While a shortage in the supply of homes on the market led to greater price expectations in June, the increase in the number of new instructions in some parts of the country will act as a brake on any genuine recovery, especially as credit conditions remain tight, unemployment worsens, and the economic climate remains one of insecurity and uncertainty. As Jeremy Leaf of RICS cautioned, “it is unlikely that there will be a sustained upturn while mortgage lenders remain risk adverse”. Thus, buyers will continue to find it difficult to obtain finance for a house purchase, and sellers will remain unable to set asking prices to their liking.

Looking at the more long-term prospect, the PWC report said that even by 2020, assuming five years of relatively strong growth had taken place by then, house prices could still be below 2008 levels.




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