UK house prices may not return to their peak until well into the 2020s, claimed a report from PwC yesterday.
House prices reached a peak in 2007 that they may not reach until 2017 in cash terms, and 2024 relative to consumer prices, the report said.
Average prices are expected to plateau for the next two years, but single first-time buyers without financial assistance are still unlikely to be able to buy a first property until they are in their 30s.
Indeed, if required deposits increase to 20 per cent, then first-time buyers without financial aid may be 40 before they can afford to get a foot on the property ladder, PwC estimated. By 2010, 84 per cent of first-time buyers younger than 30 were beneficiaries of financial assistance from relatives or friends, compared to just 38 per cent in 2005.
Housing production has stalled, which PwC put down to restrictive planning laws fostered by so called Nimbyism.
Building that does get permission is often away from the highest priced areas, where it is desired most – owner-occupiers in high price areas lobby vigorously against expansion of housing stock, the report said.
PwC argues that the UK needs a robust supply of rental property, such as that in some comparable European countries, partly by allowing economies of scale in rental property management.