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House prices face slow road to recovery, says PwC

Housing is facing a slow road to recovery with UK prices not expected to reach past peaks until 2020, according to new research.

The latest gloomy news for the housing market came from auditors PricewaterhouseCoopers.

PwC offered the estimates in its latest UK Economic Outlook report. The analysis points to only a 12 per cent chance that real house prices will have risen back above their 2007 peak by 2015, with the median projection being for a 12 per cent real decline over this period.

Even by 2020, there is only just over a 50 per cent chance of a real house price rise relative to 2007.

John Hawksworth, chief economist at PwC, said:  “We expect average UK house prices to drift down further over the next year and then enjoy only a modest recovery over the next few years.

“This reflects the dampening impact of declining real income levels and continued tight credit conditions for first time buyers in particular.

“Later in the decade, however, we do expect stronger house price growth as supply shortages reassert themselves and credit availability gradually returns to more normal levels. But it will be a long slow road to recovery.”

The report lists potential winners; long-term investors, house buyers with deposits, and people moving from London to the rest of England.

And it lists potential losers; those who bought between 2006 and 2008, first time buyers with no deposit, anyone looking to move into London or the South east and manufacturers and retailers linked to household goods.

It also says UK economic recovery will be led by London and the South east.

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