UK home prices will not reach 2007 peak until 2019

Residential property prices in the UK are not expected to reach their 2007 peak until 2019, according to the Knight Frank UK market forecasts – Q4 2012. If accurate, it would represent the longest housing market recovery on record. The property firm projects that UK housing transactions will increase to 2% in 2013, but to remain well below peak levels for the rest of the decade. Despite the recent boom in prime central London property prices, Knight Frank is expecting to see no price movement in 2013, as a consequence of pending tax changes which are forecast to weigh on the market. Gráinne Gilmore, head of UK residential research, says: “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. “Transaction levels have 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.” Although home prices in London have generally gone from strength to strength in the past couple of years, values across the rest of the country have been flat or modestly declined since 2010, as a result of the weak economy. Gilmore added: “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.”

Article courtesy of Property Investor Today

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