By 2012, house prices in the South of the UK could return to similar values as those seen in 2007, but in other parts of the country it could be a lot longer, with full recovery not predicted until 2016.
Research from estate agent Savills shows that property in London and the South-East will start to bounce back first, returning to former levels by the time the London Olympics rolls around, but those who own property in other regions such as the North-East and Northern Ireland, could be waiting for eight years, as prices will not start to turn around as soon and will rise more slowly.
Savills has mapped out its predictions for the British housing market's recovery, and the light at the end of the tunnel is nearer in the South, where the duration and size of the market slowdown will not be as severe as other areas of the UK.
So, bad news for existing home owners and investors who want to sell in the near future and are not looking at the long-term. But, this is good news for first time buyers and savvy investors who can take advantage of the fall in house prices to get a foot on the property ladder or snap up a bargain if they can find an affordable mortgage
There has already been a 50 per cent drop in the number of transactions in the housing market compared to this time last year, and the number of new houses being built is expected to fall even further as construction companies struggle to shift properties in order to start new developments.
Savills is urging potential investors who are looking to cash in on changes in the property market to be aware of which regions will pose the best investment
opportunities by knowing which ones will recover first, and therefore "avoid being timed out by a rising market."
"This property market downturn has affected virtually all property sectors and UK regions simultaneously but regions will vary far more when the upturn comes." explains Yolande Barnes, head of Savills
"The lack of turnover and new supply which is such a feature of this downturn will be likely to lead to sharp increases in value in high-demand, low supply areas. Competition amongst homeowners will once again lead to rising prices, particularly in those areas with higher levels of housing market equity and stronger household purchasing power such as London, the South East and Scotland".
Ms Barnes predicts that the downturn will continue for at least another 12 months, but is mindful that the market has been brought down by a withdrawal of credit, not of demand or diminished purchasing power, and that these two factors will feature heavily in the market's recovery.
She concluded: "Although the credit crisis has affected all sectors and regions more or less equally and simultaneously, we will see a very different pattern in the recovery. Canny investors will take this into account now".
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