Real-terms growth in property prices could be two or more years away, experts are predicting, with the Government unlikely to intervene to help boost prices in the upcoming Autumn Statement, i understands.
Data from building society Nationwide this week showed house prices are 5.3 per cent lower compared to August last year, in the biggest annual decline since 2009.
Higher mortgage rates and cost of living pressures have led to falling property values, which many have suggested will continue later this year.
But although some small growth could come next year, mortgage brokers and housing market experts have said that real house price growth – which is higher than inflation – may not come until 2025 or possibly even later.
The Treasury and Bank of England economists have been monitoring the property market closely, but regard it as a lower priority than other metrics such as inflation, unemployment and wage price growth.
A senior Government source said the decline in average house prices had not come as a surprise because it was in line with the projections of the Office for Budget Responsibility. “What we are seeing is what economists expected,” the source said.
Any further economic support is more likely to be targeted at vulnerable groups struggling with their regular housing costs, rather than boosting asset prices, insiders believe.
Richard Donnell, research director at Zoopla, told i that data suggested the property market needed mortgage rates of around 4 per cent or lower – generally on 5-year fixes for those with a 25 per cent deposit – for there to be real-terms price growth.
“At 4 to 4.5 per cent rates you see house price track earnings growth and at 5 per cent you get real price falls,” he said.
Nicholas Mendes, of John Charcol brokers, said current forecasts showed five-year mortgage rates could get below 4.5 per