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NE house prices will recover â??in eight years'

Some areas of the country will take eight years to recover from the current housing market downturn, but other regions will bounce back by 2012, a report claimed this week.

Estate agents Savills said house prices in London, the South East and Scotland are likely to have returned to their 2007 levels by 2012. However, a full recovery is not expected in the North East and Northern Ireland until 2016.

The group said property transactions were currently running at half of last year’s level, while the number of new homes being built is expected to continue to fall.

As a result, it said, supply was likely to become constrained in many markets over the coming months, leading to sharp price increases in certain areas of the country once demand began to increase again.

Yolande Barnes, head of Savills residential research, said: “This property market downturn has affected virtually all property sectors and UK regions simultaneously but regions will vary far more when the upturn comes. “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.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .