The housing market should bottom out in the coming 12 months, and by the end of the year prices could start to rise again, according to new research.
Affordability in UK housing has improved dramatically over the past year, meaning the property market could recover sooner than most economists expect.
The finding, from Lombard Street Research, contrasts markedly with the consensus City view, which is that house prices will fall by another 10-15% this year, taking their total fall during the current crash to over 30%.
In fact, the LSR/Daily Telegraph housing affordability index shows that house prices are now moving back into affordable territory. The index rose from 93.1 points to 96.1 points in the third quarter of last year. According to LSR experts, it is now likely to be close to, or even above, 100 points, which signifies the average housing value over the past 50 years.
The indicator, which compares house prices to other financial factors, including earnings and mortgage rates, implies that those now buying a house are doing so at about its fair value.