The housing market is tipped to make a gradual recovery over the coming years, with property prices set to return to pre-crisis levels in less than a decade.
The forecasts, from estate agents Knight Frank, reveal that the housing market is set to take the longest time to bounce back on record, with property prices returning to levels seen before the height of the financial crisis by 2019.
However, the housing market will take until 2031 to reach 2007 levels in real terms, once inflation is stripped out.
The research also outlined that transactions are likely to increase by just 2% next year, as buyers who require higher loan-to-value ratios struggle to get on to the first rung of the property ladder.
Knight Frank head of UK residential research Gráinne Gilmore, said: “Transaction levels have roughly halved since the last market peak in 2007, and are 35 per cent below the 20 year average, as first-time buyers and those further up the housing ladder struggle with tighter mortgage lending rules.”
Gilmore goes on to say that while the sub-£2m property sector should go on to experience good growth, prices in the £2m-£5m property band may be subdued as result of an increase in stamp duty for properties valued over £2m.
The latest Nationwide House Price Index also revealed a positive outlook for the UK’s property market, after revealing that property prices across England and Wales rose by 0.6% in October.
The increase reverses the downward trend recorded in recent months, and may go some way to negating the fall of 0.4% recorded in September.
Robert Gardner, Nationwide’s Chief Economist, said that while monthly changes in house prices failed to establish either an upward or downward trend in the market, “the annual pace of change continues to display a picture of relative stability.”