Thursday, 12 July 2012 10:40 AM
UK house prices are unlikely to return to 2007 levels in real terms until the mid 2020s, according to a PricewaterhouseCoopers (PwC).
The accountancy firm says it will take until the middle of this decade for prices to return to the level seen at the peak of the market in nominal terms. It will take another ten years after that when inflation is taken into account.
PwC says house price growth is likely to be much more modest in the longer term but that prices will remain at very high levels against earnings by historical standards. The market will stay flat in
That is bad news for young people currently priced out of the market. Without assistance, a single person is unlikely to be able to afford to buy their first home until they reach their late 30s.
And it means there will be an urgent need for new rental properties to house people who will have to rent for longer.
PwC concludes that a shortage of homes is keeping prices high and is likely to continue to do despite problems with accessing mortgage finance.
Overall, UK house prices are down by 18 per cent since 2007 in nominal terms but there are marked differences between regions. The East, South East and London have seen the smallest declines while prices have fallen most in Northern Ireland, which also saw the biggest boom.
PwC said: “It is our view that the housing market is in a period of transition and is likely to recover to its ‘new normal’ in the medium term, once the wider economic recovery picks up steam. The new normal for the housing market is likely to see more modest growth in prices, but increasing difficulties for young people wanting to get onto the housing ladder.”
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- house prices