House Market May Take Years to Recover

House prices will take more than four years to rise above their 2007 peak, a wide ranging survey of experts has warned, thus also affecting the mortgage market. 

The gloomy message was delivered by more than, 60 per cent of 225 Society of Business Economists (SBE) members surveyed for ITV1's Tonight programme.

House prices could fall by up to 20 per cent from the top of the market, according to 56 per cent of respondents - although 20 per cent took an even more pessimistic view, forecasting property values could slump by as much as 30 per cent.

More than half the experts from banks, building societies and industry said house prices would fall by between 6 per cent and 10 per cent this year.  The market will hit rock-bottom in 2009, according to 44 per cent of those surveyed.  The SBE's chairman, Bronwyn Curtis, also warned recent buyers could have to wait “a long time” to get their money back.

Speaking to the programme, she said: “It doesn't look like we're going to see a fall, which is what we're in the middle of, and a quick bounce back.  It does look as though it's going to go on, and we'll have slow growth for some time.

She added: “On top of that, house prices were overvalued, according to most economists, and so you have the situation where they remain undervalued for a long time.”

The survey is the latest addition to a steady stream of miserable news on the housing market, which saw share prices in the UK's major house builders hammered last week.

Recent figures from the Nationwide and Halifax building societies showed hefty price falls during May, while the number of homes changing hands also slumped to a 30 year low as the credit crunch continued to put pressure on the property market.

Estate agents sold an average of just 17 properties, each during the three months to the end of May, according to the Royal Institution of Chartered Surveyors; the lowest figure since it first began collecting data in 1978.

This news, comes after it was reported that around 15,000 estate agents, will lose their jobs within this year, due to the housing slump coupled with lack of mortgages due to the credit crunch, continue to take their toll.

Another official blamed the credit crunch for estate agents’ problems, said: “The irony is that there is no shortage of people who want to move house, but without mortgages they just can’t do so.  Estate agents are having to close because there just isn’t enough movement in the housing market and that is likely to have a much wider impact because a healthy housing market is essential for the health of the high street.”