Despite the fact that the UK’s housing market is showing signs of a recovery, new forecasts have suggested that property prices won’t bounce back to their 2007 peak until 2021.
In their UK Economic Outlook report, analysts at PwC have outlined a central scenario where, after consumer price inflation (CPI) is taken into account, 2015 house prices will be 15% below pre-crises levels.
The PwC report then goes on to argue that the UK’s housing market will only significantly start to pick up in 2020, where increasing wages and more favourable credit conditions will provide a boost to the property landscape.
However, consumers may have to wait another year to 2021, before the housing market comes back in line with the 2007 peak.
“We expect house prices to pick up at average rates of around 3-4% per annum in cash terms over the next four years, which is slightly higher on average than the consensus viewm,” said John Hawksworth, chief economist at PwC.
“Based on our main scenario, average UK house prices might be back above their 2007 peak in cash terms as early as the end of 2014, but in real terms this might take until around 2021.”
Hawksworth went on to say that in the coming years, affordability will still remain an issue for struggling first-time buyers.
Earlier this year forecasts from the Ernst & Young ITEM Club suggested that house prices will climb by 2.1% in 2014, before soaring by figures of 5% and 6% over the following two years.
Further forecasts made by ITEM Club include the fact that the number of housing transactions in 2013 will grow by 7.5% to reach 1 million, with this figure buoyed further in 2014 as a result of the government’s Help to Buy scheme, which allows buyers to snap up a new build home with a 5% deposit, which is also supported by a 20% government equity loan.