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House prices may not rise for a decade, experts warn
worldtraveller
Posts: 14,013 Forumite
Decades of stagnant or falling house prices have been predicted by one of the nation's leading accountancy firms, as estate agents and mortgage lenders also warn that the next year will see a marked weakening in the property market.
PricewaterhouseCoopers says house prices are "still likely to be below 2007 levels in 2015 in real terms" – with a risk that almost a fifth of property will have lost real terms value by that time. It adds: "Even in 2020, after five years of relatively steady growth, there is a 50 per cent chance that real house prices in 2020 could be below 2007 levels."
Sluggish growth in households' disposable income thanks to tax hikes and modest pay growth, gradually rising interest rates and the weak economic environment are blamed for keeping real-terms prices (that is allowing for inflation) depressed. PWC says that even if house prices in 2010 are on average 5 per cent higher in cash terms than last year, this still implies "fairly flat house prices" in the second half of this year given earlier increases, and little movement in real terms.
Falling property values are, although rare, not unprecedented: house prices last declined in real terms in the early 1990s and the mid-1970s. It suggests that much of the impact of the trebling in house prices between 1997 and 2007 will effectively be reversed. It carries serious implications for homeowners, buy-to-let investors and speculators who intend to treat their real estate as a pension plan. Levels of negative equity – where the value of the mortgage exceeds the property's worth – are likely to rise sharply.
The Independent
PricewaterhouseCoopers says house prices are "still likely to be below 2007 levels in 2015 in real terms" – with a risk that almost a fifth of property will have lost real terms value by that time. It adds: "Even in 2020, after five years of relatively steady growth, there is a 50 per cent chance that real house prices in 2020 could be below 2007 levels."
Sluggish growth in households' disposable income thanks to tax hikes and modest pay growth, gradually rising interest rates and the weak economic environment are blamed for keeping real-terms prices (that is allowing for inflation) depressed. PWC says that even if house prices in 2010 are on average 5 per cent higher in cash terms than last year, this still implies "fairly flat house prices" in the second half of this year given earlier increases, and little movement in real terms.
Falling property values are, although rare, not unprecedented: house prices last declined in real terms in the early 1990s and the mid-1970s. It suggests that much of the impact of the trebling in house prices between 1997 and 2007 will effectively be reversed. It carries serious implications for homeowners, buy-to-let investors and speculators who intend to treat their real estate as a pension plan. Levels of negative equity – where the value of the mortgage exceeds the property's worth – are likely to rise sharply.
The Independent
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Comments
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I'm guessing this is a house price discussion for the house price board.
As you seem to have no opinion on the subject you started.Been away for a while.0 -
The country is getting larger, blah blah, more people, more people not wanting to live near other types of people etc etc. will mean house prices in certain areas will always remain stable and or go up, others will fall. You dont need to be an 'expert' to predict such stuff.
I know that wasnt meantioned above etc. but no one can predict the future, someone next week; an 'expert', will predict a great growth in 2012 or such like.0 -
Paul the world cup octopus has predicted that house prices will increase during the next 10 years between -50% and +50% or maybe more of even less.
:beer:0 -
To be fair, you can't see that board unless you're logged in. I've often gone "what? where is it?? It was here earlier I'm sure of it" and it turns out, i'm not logged in!Running_Horse wrote: »I'm guessing this is a house price discussion for the house price board.
As you seem to have no opinion on the subject you started.saving up another deposit as we've lost all our equity.
We're 29% of the way there...0
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