Many property owners, buyers, sellers and investors are asking this question. Unfortunately the complex factors influencing the property market make it very difficult to predict the timing of any recovery.
After analysis of past slowdowns we believe that some of the trends identified during the property crash of the early 1990’s may well be repeated in the current cycle.
We have used the Nationwide Property Price Index to provide average property prices since 1998 and then based on this trend estimated what could happen during this boom/bust cycle.
The data shows that during the crash of the early 90’s the price boom was followed by a rapid fall in prices and then a more gradual long-term decline. It actually took 12 years for average house prices to recover to pre-1989 levels.
Over the last 2 years we have had a similar rate of decline as experienced in 1990. If history is repeated price falls may become less dramatic over coming months. Although still in their infancy this trend may be supported by recent statistics showing some improvements in the market.
Although the worst of the crash may be over, that doesn’t mean prices will immediately rebound. We are much more likely to witness continuing price falls, just at a slower rate, before any eventual recovery. Indeed we expect the bottom of the market is several years away, and we may not see average prices rebound until 2014.
Following the historic trend you could find that the value of a house bought at the peak of the market in 2007 may not recover to its original purchase level until 2021!
Click graph above to enlarge
Although these timescales and price fluctuations may seem extreme it is believed that the current economic conditions are worse than at any time since the great depression of the 1930’s.
Therefore the depth of the slowdown and the pace of any recovery may be worse than anything experienced by recent generations. Indeed without cheap, freely available and unregulated credit the booms experienced during previous cycles may not be as exaggerated in future.
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