Economists predict four year recovery for house prices

A survey conducted for the Tonight programme screened by ITV paints a picture of long-term gloom for the UK housing market.

In a poll of 225 members of the Society of Business Economists (SBE), two-thirds of those questioned believed it could take more than four years for property values to rise above their 2007 peak.

Over 50% of participants estimated that the market will bottom out with a 20% fall in prices; around one-fifth were no so optimistic, expecting a drop of up to 30%.

A majority of SBE members surveyed expect house prices to fall by between 6% and 10% in 2008.

No quick recovery from the downturn is anticipated, leaving those who entered the market at its peak with a long wait before they see an increase the amount of equity they hold in their homes.

An unfortunate minority could be waiting a number of years before recovering from negative equity.

Only last week, the Council of Mortgage Lenders estimated that 23,200 homeowners who bought properties with no deposits in the year to the end of March already have mortgages larger than the value of their homes.

SBE members cover a broad spectrum of business life, from the City, commerce and industry, public and private sectors, large businesses and small.

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