House prices in the red until 2020, warns PwC

Housing prices are unlikely to recover to their peak levels until 2020, according to PricewaterhouseCoopers' latest UK Economic Outlook.

Even then, the analysis suggests there is just a 50 per cent chance of a real house price rise relative to 2007, when prices reached their peak.

Over the next four years there is only a 12 per cent chance that real house prices will have risen back above their 2007 peak, according to PwC's analysis. In fact the median projection over the period until 2015 is for a 12 per cent real decline.

There is further depressing property news in the Rics June 2011 UK Housing Market Survey published today. It reports that the housing market faced a stalemate during June, as demand failed to pick up and supply of new property fell back.

Rics' housing spokesman Alan Collett said: "The housing market was pretty flat during June. Buyer interest in purchasing property remains relatively low across much of the UK while the volume of new stock which is coming to the market has slackened. With continued uncertainty over the jobs market and the economy, this subdued picture is set to continue."

The picture is going to get worse before it shows any sign of recovery, warned John Hawksworth, the chief economist at PwC. "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," he said.

"This reflects the dampening impact of declining real income levels and continued tight credit conditions for first-time buyers in particular." Mr Hawksworth added that there would be a "long, slow road to recovery".

"Later in the decade, we expect stronger house price growth as supply shortages reassert themselves and credit availability gradually returns to more normal levels," he said.

The Rics figures for June show that the property market in London continues to buck the downward trend.

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

The capital and the South-east will lead the economic recovery, according to PwC. "The UK as a whole faces a slow climb to recovery given the continued squeeze on consumer and government spending," Mr Hawksworth said. "But we see a distinct regional pattern to growth with the public spending cuts acting as a drag on recovery in Northern Ireland, Scotland, Wales and the North-east in particular."

He said London and the South-east is not be immune to the cuts, but growth there is less dependent on the public sector and more on the international financial and business services sector, in which growth is likely to remain relatively strong.

However, there was some relatively positive news for the property sector yesterday as new data from the Council of Mortgage Lenders showed a rise in loans for house purchase and remortgaging. Figures for May showed more signs of stabilisation in the mortgage market, according to the CML.

Michael Coogan, the CML's director general, said: "There is no evidence of any drastic changes or significant shifts in direction for the mortgage market. These stable conditions are expected to continue for the rest of the year.

"Recent securitisation deals suggest confidence has returned as investors regain their appetite to invest in bonds backed by mortgage assets. This is a positive influence on mortgage market conditions," Mr Coogan said.

Discover more property articles at Homes and Property
PROMOTED VIDEO
News
i100
News
Budapest, 1989. Sleepware and panties.
newsDavid Hlynsky's images of Soviet Union shop windows shine a light on our consumerist culture
News
In humans, the ability to regulate the expression of genes through thoughts alone could open up an entirely new avenue for medicine.
science
News
Williams says: 'The reason I got jobs was because they would blow the budget on the big guys - but they only had to pay me the price of a cup of tea'
arts + ents
Arts and Entertainment
A sketch of Van Gogh has been discovered in the archives of Kunsthalle Bremen in Germany
arts + ents
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Austen Lloyd: Corporate Tax Associate - London

Excellent Package: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL FIRM - A...

Austen Lloyd: Senior Law Costs - London City

Excellent Package: Austen Lloyd: CITY - EXCELLENT FIRM - We have an outstandin...

Austen Lloyd: In-House Solicitor / Company Secretary - London

Excellent Package: Austen Lloyd: IN-HOUSE - NATIONAL CHARITY - An exciting and...

Austen Lloyd: Commercial Property Solicitor - Exeter

Excellent Salary: Austen Lloyd: EXETER - A great new opportunity with real pot...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee