Real estate agent Savills believes that U.K. housing prices could be in for a multi-year bull market… after they’ve double dipped (fallen again) first.
There’s tons of potential buying demand. Recent transaction volumes have been 55% below the nation’s 30-year average and 30% below the last trough in the early 1990s. Savills estimates that there are 1.5 million potential buyers ready to come back.
Yet the market won’t simply go straight up, since supply growth could outpace the rebound in buying demand at first.
However, the report also warns that, as activity in the market increases, house prices are likely to head into a double-dip this year. In the long-term though, the lack of houses bought and sold mean there should enough pent-up demand to drive prices back to growth for “several years” if liquidity improves in the mortgage market.
“In 2009, price growth was achieved in what can best be described as “a partially functioning market,” Lucian Cook, director of residential research at Savills, said.
“This indicates that the house price growth of 2009 is a temporary feature of the market. Taking figures for December, January and February together transaction levels have, at best gone, sideways over the past six months but, by contrast, more stock has begun to come to the market according to RICS. This is set to cause a secondary but shallower dip in mainstream house prices, particularly given the return of uncertainty that appears to have returned to the economy and the prospect of a period of election related inactivity.”
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