House prices will recover in the next few years

The stumbling UK property market will begin its latest recovery over the next few years, but it will still take a while for prices to return to previous peaks. Within two years, housing shortages will start to reassert themselves, driving up the average price of homes.

This is the latest prediction from financial experts PricewaterhouseCoopers (PwC), which said that house prices will be seen to start a recovery long before they hit the top levels seen as long ago as 2007, when the recession sent UK finances tumbling.

It has said that over the next couple of years, prices will remain broadly flat, as they have done over the past 12 months, with most of the recovery seen towards the middle or end of the decade.

However, it also went on to add that there will be no likelihood of property prices reaching levels previously seen pre-recession until 2007 in terms of cash value until 2017. And for the price to reach the same level in terms of inflation as 2007, it will take a further seven years, with homeowners to wait until 2024 to see this change.

One of the drivers of this will be the fact that the UK is set to start a period of economic recovery through 2013. PwC said that lower levels of inflation will stop squeezing Brits finances as hard, allowing people to make more financial transactions.

John Hawksworth, chief economist at PwC, said: "House prices should recover later in the decade as confidence is gradually restored, credit conditions ease for first time buyers and underlying housing supply shortages reassert themselves. However, as house prices are likely to stay high relative to earnings by historic standards, and credit is likely to remain less readily available than before the crisis, we estimate that a single person leaving university today is unlikely to be able to afford their first house until their late 30s without financial assistance from their parents or others."