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House prices to struggle on until 2020

House prices to struggle on until 2020

Category: Mortgages

Updated: 12/07/2011
First Published: 12/07/2011

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Homeowners shouldn't expect their property values to hit the heights of 2007 until 2020, PricewaterhouseCoopers (PwC) has warned.

The firm has worked out that there is just a 12% chance that house prices will have returned to their 2007 level by 2015, while there is just over a 50% chance that they will do so by 2020.

"We expect average UK house prices to drift down further over the next year and then enjoy only a modest recovery over the next few years," said John Hawksworth, chief economist at PwC.

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

"Later in the decade, however, we do expect stronger house price growth as supply shortages reassert themselves and credit availability gradually returns to more normal levels. But it will be a long slow road to recovery."

There are a number of potential winners and losers should the predictions be proven correct.

House buyers, including first time buyers, with deposits will likely benefit from low interest rates, while people moving from in and around London to other regions can expect to get more for their money.

By contrast, people looking to move to the South East, including London, from other regions and first time buyers without deposits can expect to lose out.

Figures out today from the Royal Institution of Chartered Surveyors show that only London has seen property prices increase over the last year.

"With continued uncertainty over the jobs market and the economy, this subdued picture is set to continue," said RICS housing spokesperson, Alan Collett.

"London, however, remains a market apart with both sales and prices showing a greater degree of resilience."

Figures showed that the UK housing market faced a stalemate during June, as demand failed to pick up and supply of new property fell back.

Demand for property showed little change in June, with new buyer enquiries as they were in May; indeed, demand has been broadly flat for the last six months.

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