The housing market is entering 'a mini ice age', with anybody who bought between 2006 and 2008 among the biggest losers, a top firm of accountants has claimed. It warns Britain's 18million homeowners that prices may not recover to their peak levels for more than a decade.
The report, from Pricewaterhouse Coopers, says there is a 'near 50 per cent chance' that prices will still be underwater in 2020.
Depressed: House prices may not recover to their peak levels for more than a decade, a new report has warned
At the price peak in 2007 the cost of the average property was just under £200,000.But the same home is currently worth £160,000, a fall of £40,000, equal to 20 per cent of the property's value at the peak.
John Hawksworth, chief economist at PWC, said: 'There is a near 50 per cent chance that real house prices in 2020 could be below 2007 levels.' He blames the housing crisis on a long list of woes, from the battle to get a mortgage to the poor pay rises or pay freezes being given to workers. In a warning to homeowners worried about the value of their house, he said: 'It is likely to be a long and bumpy road to full recovery.'
The PWC report, published today, also lists the 'losers', if its bleak prediction about the housing market is correct. The worst-hit will be people who bought 'at or close to the top of the market', that is between 2006 and 2008. Many will be in negative equity because they took out a massive mortgage to buy the property, possibly 125 per cent of the property's value, but it is now worth less than the size of their loan.
Other 'losers' will be people who want to move to London or the rest of the South East from elsewhere in Britain.
For Sale signs in London: The capital is the only region of the UK where house prices continue to rise
This is because prices continue to rise in London, unlike any other region, which means the capital is becoming increasingly unaffordable for those who live elsewhere but want to move. It comes as a separate report, from the Royal Institution of Chartered Surveyors, also warned of the country's 'depressed' property market.
One estate agent, from Bridlington, East Yorkshire, said: 'I have seen the ups and downs of the property market over the past 40 years. 'But this is the longest and deepest I have experienced and I still cannot see any improvement for the next couple of years.'
RICS said the typical estate agent is selling just one property a week, which is locking people into homes which they are desperate to sell.
Another agent, from Hampshire, said buyers are 'very price conscious' and offering 'five to 10 per cent below even reasonable asking prices.' The nightmare facing first-time buyers is one of the biggest problems facing the housing market, according to PWC.
The Council of Mortgage Lenders said yesterday a young person is typically force to put down a deposit worth 20 per cent of the purchase price. Before the credit crunch struck in 2007, the average deposit of a first-time buyer was just 10 per cent.
Nicholas Leeming, business development director of Zoopla.co.uk, the property website, warned the housing market will 'remain in the doldrums' unless the mortgage freeze stops.
Peter Rollings, chief executive of the estate agents Marsh & Parsons, said: 'The reality is that getting a mortgage remains an uphill battle for the average first-time buyer.'
The PWC report is based on 'real' house prices, which means it is looking at house prices after stripping out the impact of inflation.
Overall, it predicts 'real' house prices will rise just one per cent between 2007 and 2020.
The report, from Pricewaterhouse Coopers, says there is a 'near 50 per cent chance' that prices will still be underwater in 2020.
Depressed: House prices may not recover to their peak levels for more than a decade, a new report has warned
At the price peak in 2007 the cost of the average property was just under £200,000.But the same home is currently worth £160,000, a fall of £40,000, equal to 20 per cent of the property's value at the peak.
John Hawksworth, chief economist at PWC, said: 'There is a near 50 per cent chance that real house prices in 2020 could be below 2007 levels.' He blames the housing crisis on a long list of woes, from the battle to get a mortgage to the poor pay rises or pay freezes being given to workers. In a warning to homeowners worried about the value of their house, he said: 'It is likely to be a long and bumpy road to full recovery.'
The PWC report, published today, also lists the 'losers', if its bleak prediction about the housing market is correct. The worst-hit will be people who bought 'at or close to the top of the market', that is between 2006 and 2008. Many will be in negative equity because they took out a massive mortgage to buy the property, possibly 125 per cent of the property's value, but it is now worth less than the size of their loan.
Other 'losers' will be people who want to move to London or the rest of the South East from elsewhere in Britain.
For Sale signs in London: The capital is the only region of the UK where house prices continue to rise
This is because prices continue to rise in London, unlike any other region, which means the capital is becoming increasingly unaffordable for those who live elsewhere but want to move. It comes as a separate report, from the Royal Institution of Chartered Surveyors, also warned of the country's 'depressed' property market.
One estate agent, from Bridlington, East Yorkshire, said: 'I have seen the ups and downs of the property market over the past 40 years. 'But this is the longest and deepest I have experienced and I still cannot see any improvement for the next couple of years.'
RICS said the typical estate agent is selling just one property a week, which is locking people into homes which they are desperate to sell.
Another agent, from Hampshire, said buyers are 'very price conscious' and offering 'five to 10 per cent below even reasonable asking prices.' The nightmare facing first-time buyers is one of the biggest problems facing the housing market, according to PWC.
The Council of Mortgage Lenders said yesterday a young person is typically force to put down a deposit worth 20 per cent of the purchase price. Before the credit crunch struck in 2007, the average deposit of a first-time buyer was just 10 per cent.
Nicholas Leeming, business development director of Zoopla.co.uk, the property website, warned the housing market will 'remain in the doldrums' unless the mortgage freeze stops.
Peter Rollings, chief executive of the estate agents Marsh & Parsons, said: 'The reality is that getting a mortgage remains an uphill battle for the average first-time buyer.'
The PWC report is based on 'real' house prices, which means it is looking at house prices after stripping out the impact of inflation.
Overall, it predicts 'real' house prices will rise just one per cent between 2007 and 2020.
Source : DailyMail
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