Subdued house prices 'for years to come'

Posted: 12 Jul 2011 14:34:29 GMT

House prices are unlikely to return to peak levels before 2020, it has been found.

Average house prices in the UK are likely to remain subdued for some years to come, new research has indicated.

Analysis by PricewaterhouseCoopers (PwC), in its latest UK Economic Outlook report, predicted the costs will not return to peak levels until 2020.

The study found there is only a 21 per cent chance real housing prices will have climbed up to those recorded in 2007 by 2015, while there is also just a 50 per cent chance of such an escalation in nine years' time.

John Hawksworth, chief economist at PwC - which calls itself a powerhouse of commercial enterprise aiming to build the iconic professional services firm - said it is expected that average costs will slide over the next 12 months before experiencing a slight upturn in the following few years.

"This reflects the dampening impact of declining real income levels and continued tight credit conditions for first time buyers in particular," the industry figure explained.

He anticipated, however, that stronger growth is on the cards for later in the decade, thanks to credit availability returning and a reassertion of supply shortages.

The report suggested potential winners regarding UK house price performance in the coming years include institutions looking to invest in the residential housing market for the long-term and house purchasers - including first-time buyers (FTBs) with deposits.

However, FTBs without such down-payments were identified as being among those likely to 'lose' in the next decade.

In terms of regional economic growth, London and the south-east appear to be leading the way, while Wales, Scotland, Northern Ireland and the north-east have fallen behind.

Mr Hawksworth continued: "The UK as a whole faces a slow climb to recovery given the continued squeeze on consumer and government spending."

He said risks remain weighted to the downside, which means it would therefore be wise for the Bank of England to keep interest rates as low as they are for the months ahead.
 

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