House prices 'may remain flat for five years'

Posted: 06 Apr 2010 11:45:45 GMT

There is a very real possibility that house prices will remain flat for the next five years or so, an industry figure has claimed.

Speaking to the Daily Telegraph, Jamie Dannhauser, senior economist at Lombard Street Research, said that the favourable market conditions which drove house prices up over the last quarter of a century have vanished.

Mr Dannahuser believes the availability of credit is a major factor in the reversal of the housing market's fortunes, with first-time buyers struggling to gather the required funds and lenders reluctant to provide mortgages to anyone considered a risk.

"My medium-term view now is that real house prices over the next three to five years will be flat at best. But it's quite conceivable that the equilibrium level of real house prices of 06/07 will not be reached again," he told the newspaper.

Howard Archer, chief UK and European economist for HIS Global Insight, recently suggested that muted data from the British Bankers Association regarding mortgage lending meant that house prices will remain flat for the remainder of 2010 at least.



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