PwC predicts slow recovery for house prices

In the companies July UK Economic Outlook Report it forecasts house prices will not reach 2007 peak levels until after 2020.   

The company predicts the damage caused by economic uncertainty and the eurozone crisis will continue to have a significant impact in the short to medium term. 

Whilst they expect the market to pick up due to a shortage in supply, they do not expect nominal prices to exceed 2007 levels until the second half of this decade. In real terms they will not reach these levels until the mid-2020s. 

The Royal Institute of Chartered Surveyors recently offered similar thoughts. Peter Bolton King, RICS housing spokesman, said: “Ongoing economic instability in the UK and overseas has continued to undermine consumer confidence, and the reluctance of many banks to offer affordable mortgage products has created something of a stagnant market. 

“In spite of this, a gradual stability is returning to the market and surveyors expect transaction levels to increase over the coming months, even if prices continue to dip across most parts of the country.” 

Despite this, the ratio of house prices to earnings is expected to remain at a historically high level.  

PwC chief economist John Hawksworth said: “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.” 

The news is not entirely gloomy with Mr Hawksworth pointing to significant growth opportunities in the private rental market, as people are unable to get on the property ladder.  

The UK’s GDP is also forecast to pick 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," Mr Hawksworth said.