New research by highly respected accountancy experts Pricewaterhouse Coopers (PwC) suggests that prospective purchasers of new home insurance should be prepared to wait a long time before the property they buy, appreciates in value.
According to a long range forecast by the economists at PwC they expect the housing market to stagnate over the next decade and only in 2020 will homeowners see the value of their property be equivalent to its 2007 price. For the aforementioned first time buyers, they will probably see their home drop in value over the first three years and only then start to slowly gain value. Of course long range forecasts are not always accurate!
Industry pointers concur
PwC though are fairly sure they will be right. Certainly their forecast about the next few years will find agreement with many in the industry. The Council of Mortgage Lenders (CML) are still releasing figures that show lending to be at a depressingly low level, the Royal Institute of Chartered Surveyors (RICS) report lacklustre action on house purchases and in fact reckon that prices have still some way to fall because there are so few buyers around.
Hard decisions to be made
Although the housing market has proved notoriously fickle over the years the current situation does leave first time buyers especially, with a conundrum.
Do they throw themselves wholeheartedly into saving for a deposit on a home that once they buy will actually drop in value? At the moment deposit requirements by lenders mean any conventional couple saving for their first home together will have to make many sacrifices to raise the cash for that important down payment. They must ask themselves the question is it worth it?
Alternatively they can take out buildings and contents insurance on a rented property that will leave them with money in their pockets to spend on furnishings, décor and nights out. Of course the frustration with this course of action is that tenants can very rarely set up home exactly as they choose. Most landlords will have some restrictions on just how the property is decorated, used and who exactly lives in it.
How many will own a home in 2020?
The PwC forecast did not put a figure on the percentage of the population who would own their own home in 2020. Perhaps they did not want to push their luck too far when it comes to predicting the future.