House prices will fall early next year and are unlikely to climb back to their 2007 peak for another five years, it was claimed today.
Recent evidence of house price rises are no more than a 'false dawn', according to a leading group of economists.
Property prices have already fallen by about 20 per cent compared with the peak in the summer of two years ago and many other economists have said they believe the bust is now over.
However, the Ernst & Young ITEM Club says it believes that the recent rise in house prices will not be sustained beyond the spring of next year.
Instead the group says it expects renewed price falls during the first half of 2010, followed by two years of stagnant prices.
It believes prices will then begin to pick up slowly through 2013 on the back of a strengthening economy and easier access to mortgages, hitting 2007 levels the next year.
False dawn: Economists predict house prices will begin to fall again in the first half of 2010
The gloomy prediction goes against surveys by both the Halifax and the Nationwide, which have picked up price rises in recent months, while at the same time the number of sales and mortgage approvals have improved.
At the same time, the Council of Mortgage Lenders said today mortgage lending was 19% higher during July than in the same month of 2008 - the first material annual growth since early 2007.
The group described the increase as being significant, but warned that it may not be sustained due to the ongoing problems affecting the mortgage market.
Last week the Halifax said low interest rates mean that mortgage repayments are at their lowest level in seven years in relation to income, so making property more affordable.
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