UK housing market predictions 2011 - 2012

UK housing market predictions 2011 - 2012 ; UK house prices are likely to remain subdued for almost another decade, with no return to pre-crisis levels likely until 2020, according to a new report published by PricewaterhouseCoopers (PwC).

The report, the UK's Economic Outlook, revealed only a 12 per cent chance that real house prices would rise to their pre-recessionary peak levels in 2007 by 2015, with a just over 50 per cent chance of a rise expected by 2020.

According to the report, UK house prices are also predicted to drift down even further over the next year before enjoying only a "modest" recovery over the next few years.

John Hawksworth, chief economist at PwC, said this reflected the dampening impact of declining real income levels and continued tight credit conditions for first time buyers.

Mr Hawksworth said that it will be "a long slow road to recovery" and that stronger growth in house prices isn't to be expected until later in the decade, when "supply shortages reassert themselves and credit availability gradually returns to more normal levels".

Despite consumer spending expecting to fall this year by 0.3 per cent in real terms, the survey revealed that the UK could expect GDP growth of up to 1.3 per cent in 2011 due to bullishness with net exports.

By next year, growth levels are expected to see a 2.2 per cent rise. These predictions are based on business investments that are expected to pick up as consumer spending is still expected to remain subdued.

A continued squeeze on consumer and government spending, as well as weak house prices, are reported to be contributing factors dampening the consumer spending sector.

As the UK as a whole is faced with a slow recovery process, there is a distinct regional pattern to growth, with the public spending cuts causing recovery in Northern Ireland, Scotland, Wales and the North East to lag, Mr Hawskworth added.

The report confirmed that growth projections for London and the South East would be the most robust since they are less dependent on the public sector and more dependent on the international finance and business service sectors. (source www.ftadviser.com )

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