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There are two ways to read the report prepared by Oxford Economics for the National Housing Federation that came out last week, which suggested that house prices will fall throughout 2009 and 2010, with stabilisation coming in 2011.

One is that anybody who bought at the top of the market in 2007 will remain underwater for a long time. Even in 2013, house prices in England will be 3% below their pre-credit-crunch peak, climbing above it only during 2014. It seems it will be a long haul back to 2007 levels.

The same was true in the 1990s. According to the Nationwide, it took until the first quarter of 1998 to regain the third-quarter 1989 peak. On the Halifax measure, prices rose above their January 1990 peak in November 1997. For homeowners who signed up to Northern Rock’s infamous Together mortgages, a combination of mortgage and personal loans worth up to 125% of the value of the property, it will take a lot longer.

The other message of the forecasts, however, is that the recession is sowing the seeds of the next boom. Supply shortages are producing unusual movements in individual local markets. According to John D Wood estate agency, prices in Fulham and Notting Hill, both in west London, are up by 27% from their lows. The latest Halifax numbers, up 1.1% last month, have added to current optimism.

The Housing Federation’s concern is with the broader picture, including social housing. It expects 250,000 new households annually in England until 2026, in line with official projections, but warns that only 60% of the new homes required are being built.

There is room for debate about future household growth. New households formed at the rate of just under 180,000 a year over the period 1996 to 2006, though they swelled to about a quarter of a million annually after eastern European immigration to the UK in 2004.

Perhaps too much is being read into this short-term trend, amid evidence that the flow has slowed, if not reversed, in the recession. But the point remains. People have to live somewhere, so if not enough homes are being built, then housing will become more expensive, however much people would wish it otherwise.

- The first stages of the recovery in the housing market will be led by prime central London, according to research released by Savills estate agency. The report warned that new properties coming up for sale in the autumn will correct the imbalance between supply and demand, thereby taking some of the heat out of the market and eradicating the gains that have been seen in the last few months.

- Tenants cause an average of £511 worth of damage every year to their rented properties, according to findings from Homeserve, a home repair service. The biggest headache for landlords was fixing tenants’ botched attempts at DIY. Other problems include blocked sinks and drains, red-wine and mascara stains on the carpet, vermin infestation — even, in one case, a makeshift cannabis factory (which cost £4,000 to clean up).

Source: The Times - 09 Aug 2009