Second Dip in UK House Prices to be a Long One Says PWC

Accounting firm Pricewaterhousecooper has issued some very negative predictions on the future of UK house prices. According to PWC, there is a 70% chance that UK house prices will still be below peak 2007 levels in 2015 -- in real terms. This is despite a continued and expected recovery.

Further, PWC also believes there is a 50% chance that real house prices will still be below 2007 levels in 2020 could be below 2007 levels. Aside from the fact that this is the first prediction in percentages I have seen, I not only agree with the scenario but am 100% rooting for it.

According to recent data by the Global Property Guide, UK property is currently over 20% overvalued. The was confirmed by the Nationwide's latest affordability index which showed the average house price is currently 4.4 times the average first time buyer's salary, compared to the long term average of 3.3.

House prices need to come down. We are currently in a very difficult time for the housing market, what with the government cut-backs imminent and loans scarce and expensive, it might be a good idea to get rid of the overvaluation now and move on.

Not that there is much doubt in my mind about whether prices will fall or not, for me it is now a foregone conclusion. Pretty much everyone is in agreement that supply is currently rising and demand is currently falling:

Rightmove recently said that supply increases accelerated by 20% upon the announcement that HIPs were to be suspended, and now the latest housing market survey by the Royal Institute of Chartered Surveyors has also found that the "net balance" of properties coming to market has risen to the highest level for three years. RICS also said that demand is falling, with 5% more chartered surveyors reporting a fall than a rise (down from a positive 8% in May).

Prices are already falling, the Land Registry recorded a 2% drop in May, and Halifax recorded its third consecutive monthly fall in June. Looks like the much talked about second dip is upon us, and that UK houses may finally come within reach of first time buyers -- those who can stump up a 10% minimum deposit that is.

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