The recent gains in UK house prices are likely to prove only a temporary respite before a further steep fall next year, according to Fitch, the global ratings agency.
Fitch warned yesterday that it expected prices to fall by about 30% in total from the October 2007 peak, despite three consecutive months of house price growth that has led to hopes of a more sustained recovery.
Prices are now 13% off their peak in 2007, according to Fitch. The Halifax house price index rose by 1.6% in September and by 2.8% in total in the third quarter. The Nationwide index showed that prices have risen by 4.1% since the end of 2008.
Fitch has based its estimates on the likelihood of a return to the long-term average for the house price-to-income ratio, which is still high, and warned that there would be a continued negative impact from low wage inflation and increased levels of unemployment.