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UK house prices predicted not to reach their 2007 peak until 2019

Alex Johnson

dc3cf7d4649b299b45a552daebc248bf2c2913f0 300x281 UK house prices predicted not to reach their 2007 peak until 2019UK house prices will not reach their 2007 peak until 2019, according to Knight Frank which also predicts that UK housing transactions will drop 2% in 2013.

Gráinne Gilmore, Head of Knight Frank’s UK Residential Research, said transaction levels had roughly halved since the last market peak in 2007, and are 35% below the 20 year average as first-time buyers and those further up the housing ladder struggle with tighter mortgage lending rules.

“Some five years after the start of the financial crisis, the housing sector in the UK still does not bear the hallmarks of a fully functioning market,” she said. “House prices have been flat or modestly declining across the UK since 2010. The fundamentals suggest that a further correction in prices is needed as the relationship between average earnings and average house prices is well above the long-term average. First-time buyers without a 25% deposit find it hard to climb onto the housing ladder at all, although some government initiatives such as Firstbuy and NewBuy have tried to open up the market to those with more modest deposits.

“We do not see average prices reaching their 2007 peak again until 2019, which would mark the longest period between price peaks in more than 60 years. Once inflation is stripped out, average UK house prices are unlikely to hit 2007 levels again in real terms until 2031.”

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  • Joginder Singh

    House prices not to reach their 2007 untill 2019…..I was hoping that the unsustainable and overinfliated house prices would continue to bomb for a lot longer than that especially when you consider that you are paying over the top prices for cramped boxes with tiny plots of land

  • Alex_Cheshire

    Prices need to drop further. The unsustainable house price boom got us into the mess we are in. The average house price should be no more the four time the national average income.

  • http://www.facebook.com/profile.php?id=577630423 Rob Jinman

    It’s utterly ridiculous that they are trying to prop up housing prices with government guaranteed (read tax-payer guaranteed) loans and artificially low interest rates. It is precisely this that got us into this mess. When are politicians going to realise that attaching higher price tags to our assets doesn’t make us richer? Bidding up the cost of housing just makes them less affordable; we need house prices to come down.

    It seems that all the government can do when they interfere in the economy is create bubbles: first the stock market bubble, then the housing bubble, and then the bond market bubble. And don’t forget the gigantic higher education bubble.

    We should have had a very deep and severe recession in 2008 and let free-market forces rebalance the economy, but instead the government and central bank re-inflated the bubbles by distorting the loan market further and by using “quantitative easing” (inflation) — thereby postponing the recession with precisely the policies that created it!

    It seems these left-wing economists are so delusional, they think they can employ their Keynesian wizardry to solve all our economic problems without us having to endure the consequences of decades of overconsumption and underproduction. They’re living a complete fantasy, but hey I guess it wins them votes. Ed Milliband now wants to raise minimum wage to around £8 **in a recession**. I was thinking, why doesn’t he raise it to £30, then we’d all be rich! The stupidity of our leaders is mind boggling.

  • TedMuller

    Talking up the market Knight Frank! I’d suggest a more sensible prediction would be house prices fall to their 1998 peak due to Britain’s banking led crashed economy.

  • kp456

    With the value of money and how hard you have to work nowadays is a young person of skilled labour who can actually afford to buy a house in the UK actually likely to want to buy one, or would they be more likely to move abroad to a work based economy?

  • derekcolman

    Prices should never rise to the 2007 levels in the foreseeable future. That level was an artificial bubble created by the unsustainable supply of easy credit, which eventually made all the banks go bust, and plunged the whole world into recession. After the bubble burst, prices should have plummeted down to way below half as they did in the previous bubble. However, this time a new bubble has arisen which is still keeping house prices way above their true values. This is the buy-to-let bubble which is riding on the back of low interest rates. At present bricks and mortar offer a much better return on investment than savings accounts, pension schemes, or shares etc. and consequently there is no shortage of people willing to outbid each other to get their hands on rentable property. They have a ready market of people who can not get a mortgage, and councils willing to pay any amount in housing benefits. As a result, houses are still greatly over priced, and the sales market is practically stagnant. That’s the reason banks won’t lend more than 75% or less of a house’s price. That is the level of price drop they expect when this bubble bursts.

  • http://profiles.google.com/rogerthat1945 Roger That

    Less than 1% of the houses in the UK are properly constructed, nor made to run efficiently/cheaply to last over 200 years. Not good enough to hand down to the next generation half of em. And as every modern war proves, the big cities get hit the worst in a war.

  • WhistlingNeil

    “UK house prices will not reach their 2007 peak until 2019″

    Good.

  • http://profiles.google.com/dalai.loafer dalai loafer

    Never, ever borrow money at interest to purchase a depreciating asset.


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