Recent optimism about the UK’s housing market has been tempered by a report from PricewaterhouseCoopers (PwC) warning that prices could fall further, albeit slowly, during the next 18 months.
The firm of accountants is also predicting a very slow recovery, with a 30% possibility that prices will take until 2020 to return to their 2007 peak.
According to PwC, the average UK house price reflected an overvaluation of around 25% in mid-2007 and a further decline of up to 10% remains a possibility.
Buyers should therefore take a long-term view because it will take time for confidence to recover, credit conditions to ease and unemployment to cease rising.
For PwC, the long-term extends beyond 2015 when the firm predicts property values could still be below average levels seen in 2008, after adjusting for inflation.
The report comes alongside new figures from the Royal Institution of Chartered Surveyors (Rics) showing a positive change in price expectations for the first time since May 2007.
In its June survey, the Rics found the net balance of surveyors reporting falling rather than rising prices improved from -43.8 in May to –18.1.
While the balance remains negative, the reading is at its highest since September 2007.
However, Rics spokesman, Jeremy Leaf, says that a lack of stock on the market is providing a boost for prices and is doubtful that there will be a “sustained upturn” while mortgage lending remains tight.
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