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UK house prices won't return to peak until 2020
Friday, July 13, 2012
UK house prices will not return to their peak levels until after 2020, according to PricewaterhouseCoopers.
The firm's latest UK Economic Outlook report predicts that average property prices in the UK will stay flat for the next couple of years and then recover as supply shortages begin to take effect. As a result, prices will not hit the peak levels of 2007 until 2017 in cash terms - or around 2024 in real inflation-adjusted terms.
Single people without financial assistance may not be able to buy their first property until their late 30s, adds the report. The economy, on the other hand, will recover sooner, reaching 1.7 per cent growth next year after a "broadly flat" 2012. London and the South East will lead the recovery, but all regions will return to positive growth in 2013.
"Recovery in the UK has stalled over the past year as the eurozone crisis has taken its toll. However, while official data suggests that the economy fell back into a technical recession in the first quarter of 2012, labour market and business survey data suggest continued modest growth," commented chief economist John Hawksworth.
"A positive development has been lower inflation, which we expect to fall back towards its 2% target rate over the next year unless there is a significant resurgence in global commodity prices. This will boost real consumer spending power, which was severely squeezed in 2011 as prices rose much faster than earnings.
"The outlook for the UK as a whole remains cloudy but with scope for improvement - with GDP broadly flat in 2012 but picking up in 2013. We expect London and the South East to lead this gradual recovery, but all regions are projected to see at least moderate average growth in 2012 and 2013. However, risks from further storms in the eurozone need to be taken into consideration and businesses should make appropriate contingency plans for this."
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