There is a glimmer of hope for homeowners today – but only for those who can hold their nerve for at least two years.
The National Housing Federation insists that house prices will, in fact, dramatically rise over the next five years but only after a difficult 18 months.
Research by independent economists published today indicates that the average house price in England will jump 25 per cent over the next five years to £274,700. But the reversal in the current slump is not expected for at least two years.
With the latest surveys revealing that house prices fell for the 10th month in a row, The Home Truths 2008 report estimates they will continue to dive next year by 2.1 per cent but will start to recover in 2010. The rises over the next three years would then be 5.2 per cent in 2011 and 9.2 per cent and 9.3 per cent.
However, the study for the NHF, which represents housing associations, said that "anyone who believes the bursting of the housing market bubble will cure England's housing crisis is sadly mistaken". Demand for property is growing, while the supply of new housing is falling. Only 75 per cent of new homes required are being built each year, with 167,577 properties built in 2007. The figure is likely to fall to 120,000 this year.
Houses are still unaffordable to many people, the report said, with the national average 11.2 times local salaries. In London that rises to 14.2 times wages.
David Orr, chief executive of the NHF, said: "Demand for housing is going up, while the supply of new homes is going down. As soon as the economic outlook improves, house prices will resume an upward trajectory." The report, produced by Oxford Economics, said that one in every four local areas has seen its housing waiting list double in the last five years.Reuse content