UK house prices set to fall in 2012
28th Oct 2011
House prices across the UK are set to fall by five per cent next year, and will show little growth until 2014, the latest UK property report has noted.
The new Knight Frank report shows that, in real terms, when adjusted for CPI inflation, house prices will have fallen by 29 per cent from the peak of the market by 2015 and are unlikely to regain the levels seen in 2007 levels until at least 2028.
Additionally, prime country house prices will fall by 2.8 per cent next year before returning to growth in the mid-term, following more solid economic growth in the UK after 2013.
According to Grainne Gilmore, head of UK residential research at Knight Frank, said the report presented some expected and unexpected data.
She added: "After falling by 15 per cent in 2008, it was widely forecast that the market would dip again the following year, but this failed to happen - largely because of the drop in interest rates."
Ms Gilmore added that the correction is still to come, but that it has been pushed further and further out because of low base rates.
However, next year, amid a "perfect storm" of a struggling economy, public sector cuts and rising unemployment, UK property prices will drop.
"As interest rates start to rise, prices will struggle to maintain any notable growth until 2015," the expert added.
© Zoopla Property Group Limited