House prices will take nearly two decades to fully recover the damage wrought by recession and financial crisis, PriceWaterhouseCoopers warned today.
The accountant's latest UK economic outlook predicts average house prices will not reclaim their 2007 highs until 2017 in cash terms. But adjusted for inflation, it will take even longer until 2024 to reclaim their pre-recession values, PwC said. It also predicted that a single person without financial assistance may not be able to buy his or her first property until they reach their late 30s.
PwC chief economist John Hawksworth said: "Over the next couple of years, we expect the UK housing market to remain relatively flat while economic uncertainty persists, particularly in relation to the eurozone crisis."
The housing market will eventually benefit from a slowly recovering economy and supply shortages, but prices will remain out of reach for many. Mr Hawksworth added: "As house prices are likely to stay high relative to earnings by historic standards, and credit is likely to remain less readily available than before the crisis, we estimate that a single person leaving university today is unlikely to be able to afford their first house until their late 30s without financial assistance from their parents or others."
PwC predicts zero growth in the UK this year – well below official forecasters including the Office for Budget Responsibility and the Bank of England – before the pace picks up to 1.7 per cent in 2013. The economic outlook is 'cloudy but improving' although "the sunshine may come through a bit sooner in London and the South-east", its report said.
The Bank has pumped an extra £50bn into the economy via quantitative easing in response to the darkening economic climate, although further money-printing is unlikely to be needed under the accountant's central scenario. But it warned: "Risks to growth remain significant and still appear to be biased to the downside in the short term."
PriceWaterhouse-Coopers predicts that house prices will not regain their 2007 highs until 2024 when adjusted for inflation.