This Is Money: House prices 'will take 12 years to recover to pre-crisis levels' as values fell by GBP1,000 in October
Wed 07 Nov 2012
House prices will not return to their pre-crisis peak until 2019, making this the longest fall in the housing market since records began, a report says today.
It predits that prices will drop in every region next year, with Wales and Scotland among the worst hit.
The report, from the estate agency Knight Frank, says prices peaked at an average of 183,959 in 2007 but have fallen so dramatically that they will not return to this level until 2019 at the earliest. This 12-year recovery period is the longest since records began in the 1950s.
The report says the recovery is even further away if inflation is taken into account. If the increases in the cost of living are also considered, the date slips back to 2031.
During the last housing market fall, prices peaked in 1989 at 62,782 and did not reach that level again until 1998.
In a report yesterday, Halifax, the country's biggest mortgage lender, said prices have dropped for each of the last four months and were down 0.7 per cent last month. The average home now costs 158,426.
Another report, from the National Assosciation of Estate Agents says the number of properties that are available to buy has plunged since the recession.
Martin Ellis, Halifax's housing economist, said: '"Signs of a modest deterioration in the trend in house pirces continued in October. Prices in the three months to October were 1.2 per cent lower than in the preceding three months." The weak economic background has been a key factor dampening housing demand this year. Recent encouraging developments relating to the level of overall economic activity and conditions in the labour market, however, may help to support demand and underpin house prices around current levels over the coming months. The downbeat Halifax update echoes a report by property listing website RightMove that claimed nearly a fifth of homeowners who bought their property in the last five years are now saddled with negative equity.
It said that 17 per cent of people who purchased a home since 2007 have a mortgage balance bigger than the value of their home.
The most recent Land Registry figures, which are based on transactions, recorded house prices in England and Wales up 1.1 per cent to an average of 162,561 in the year to September.
However, this continues to be skewed by London prices, which were up 5.5 per cent annually, more than twice as fast as the next highest rise of 2.3 per cent seen in the South East. Property prices rose in four of the regions surveyed and fell in the other six.
Peter Rollings, CEO of upmarket London estate agent Marsh & Parsons, said that it will be some time before the overall national property market returns to health. He said: "Halifax's figures portray a downbeat performance from house prices in recent months, and reflect the troubled state of the national housing market." Buyer's spending power is still squeezed, with wage inflation still lagging behind the growing cost of living, and while there are signs that mortgage lending is beginning to head in the right direction, it will be quite some time before it returns to the level needed for significant improvement in the number of buyers able to move home each month.
"The tale is very different in London. While house price growth has been steadying in recent months, prime areas in the capital are still seeing double digit annual growth as a result of the demand from wealthier equity rich buyers, and this is helping support the average national house price."