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Home values 'down 28% from peak' Home values 'down 28% from peak'
(about 2 hours later)
UK property prices will have fallen by 28% from their peak, before the market downturn ends, the Centre for Economics and Business Research (CEBR) has said. UK property prices will have fallen by 28% from their peak before the market downturn ends, the Centre for Economics and Business Research (CEBR) has said.
The economists' group predicted the prices would reach their trough early next year, but said there was little chance of real price growth until 2013. The economists' group predicted prices would reach their trough early next year, but said there was little chance of real price growth until 2013.
Prices peaked in the third quarter of 2007 and have slid sharply since then.Prices peaked in the third quarter of 2007 and have slid sharply since then.
Average prices would rise to £170,000 by the end of 2013, from a predicted £144,000 at the end of 2009, it said.Average prices would rise to £170,000 by the end of 2013, from a predicted £144,000 at the end of 2009, it said.
'Premature''Premature'
The CEBR added that improved conditions in the housing market suggested that property prices only had about a further 8% left to fall.The CEBR added that improved conditions in the housing market suggested that property prices only had about a further 8% left to fall.
But it warned that a "sluggish recovery" in the real economy meant prices would only rise by 6% during 2010 and 2011.But it warned that a "sluggish recovery" in the real economy meant prices would only rise by 6% during 2010 and 2011.
It predicted the average cost of a home would rise by only 3.1% between the final three months of 2009 and the final quarter of 2010, with a further 2.5% increase the following year.It predicted the average cost of a home would rise by only 3.1% between the final three months of 2009 and the final quarter of 2010, with a further 2.5% increase the following year.
The gloomy forecast came despite an anticipated increase in mortgage approvals, and improvement in credit conditions.The gloomy forecast came despite an anticipated increase in mortgage approvals, and improvement in credit conditions.
Worsening conditions in the labour market and the wider economy seem likely to counter-balance historically low interest rates and slowly improving credit conditions Benjamin WilliamsonCEBR report authorWorsening conditions in the labour market and the wider economy seem likely to counter-balance historically low interest rates and slowly improving credit conditions Benjamin WilliamsonCEBR report author
Last week figures from the Bank of England suggested the growth in mortgage lending was likely to continue.Last week figures from the Bank of England suggested the growth in mortgage lending was likely to continue.
Also released last week, figures from the Nationwide suggested house prices in the UK fell by 0.4% in April, reversing some of the rise seen in March.Also released last week, figures from the Nationwide suggested house prices in the UK fell by 0.4% in April, reversing some of the rise seen in March.
The building society's figures suggest that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago.The building society's figures suggest that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago.
However calling the bottom of the market was "slightly premature" said the one of the CEBR report's authors, Benjamin Williamson.However calling the bottom of the market was "slightly premature" said the one of the CEBR report's authors, Benjamin Williamson.
"Worsening conditions in the labour market and the wider economy seem likely to counter-balance historically low interest rates and slowly improving credit conditions," he added."Worsening conditions in the labour market and the wider economy seem likely to counter-balance historically low interest rates and slowly improving credit conditions," he added.
And managing economist at the CEBR, Ben Read, added that house prices were "likely to remain in the doldrums for some time as what is likely to be a slow recovery in the real economy translates into weak wage growth and stubbornly high unemployment - factors that will put a fairly heavy lid on house price inflation."And managing economist at the CEBR, Ben Read, added that house prices were "likely to remain in the doldrums for some time as what is likely to be a slow recovery in the real economy translates into weak wage growth and stubbornly high unemployment - factors that will put a fairly heavy lid on house price inflation."
The downturn in the building of new houses over the past 18 months could lead to "significant" undersupply in the medium term, he added, which may trigger stronger growth in house prices towards 2012 or 2013.The downturn in the building of new houses over the past 18 months could lead to "significant" undersupply in the medium term, he added, which may trigger stronger growth in house prices towards 2012 or 2013.