House prices will not return to the peak reached in autumn 2007 for at least another five years, according to Ernst & Young’s Item Club. The influential group’s gloomy forecast contradicts the increasingly optimistic outlook of the Government and some commentators that the British economy has begun a sustained recovery.
The recent rise in property values is a 'false dawn' that will not last beyond spring, Hetal Mehta, Item’s senior economic adviser, said. In a special report released today, Item predicts that homeowners are in for a drop in prices in next year’s first half and then two years of stagnation. Sustained recovery will start only in 2011 and take until at least 2014 to return prices to their 2007 high, Item says.
Financial Times, The Times, Daily Telegraph, The Independent