House prices won’t return to their 2007 peak until 2019
Permalink: House prices won’t return to their 2007 peak until 2019
by Gill Montia
UK house prices won’t return to their 2007 peak levels until 2019, according to Knight Frank.
Worse still, once inflation is stripped out, average UK house prices are unlikely to hit 2007 levels in real terms until 2031.
In its latest housing market forecast, the real estate agent says it expects sales to increase just 2% in 2013, followed by little change in activity over the rest of the decade.
In addition, a further correction in prices may be needed as the relationship between average earnings and average house prices is still well above the long-term average.
Low interest rates will probably continue to put a floor under prices but homeowners can still expect a slow erosion of real prices until the price-to-earnings ratio becomes more manageable.
With regard to the mortgage market, Knight Frank reports that the most competitive deals are still for those who hold 30% or 40% of equity, while homeowners who don’t have a 25% chunk of equity in their property are mostly stuck with their current lender, unable to shop around for a more competitive deal.
Meanwhile, first-time buyers without a 25% deposit find it hard to climb onto the housing ladder at all and the jury is still out on whether the Government’s Funding for Lending scheme will ease their plight.
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