The housing market is on the brink of recession, according to latest figures, but more people will struggle to get a home as prices start to surge again in a few years, it was claimed.
The Land Registry yesterday said annual house price rises in the UK were nearly static, with the average house increasing in price by just 0.1 per cent, the lowest since its records began.
In the West Midlands, prices fell 2.3 per cent in the last year, it added – the biggest year-on-year drop in the country.
Nationally, it leaves the average property costing £180,781.
The figures came as a study commissioned by the National Housing Federation indicated houses in the West Midlands would lose an average of seven per cent in value by 2010.
But the NHF said homeowners should be optimistic, with prices starting to recover in 2011, and reaching 13 per cent above their current level by 2013.
The NHF research also said more and more people were being frozen out of the market, with the credit crunch making homes for first time buyers unaffordable, even as house prices fell.
While demand for homes is higher than ever because of the increase in divorce and life expectancy, supply is falling well below the needed level.
In the West Midlands alone, more than 121,000 households are on waiting lists for a social home.
Gina King, the head of region for the NHF, said it was critical the Government acted soon to create more affordable and social housing, as one in 13 households had now registered as being unable to find an affordable home.
“Demand for housing is going up, while the supply of new homes is going down,” she said.
“This means that as soon as the economic outlook improves, house prices will resume their previous upward trajectory.
“People are living longer, they’re delaying getting married and they’re more likely to get divorced – meaning we now have more households than ever.
“It’s clear that even with house prices falling, affordability hasn’t improved one iota. In recent months, we have seen mortgage arrears increase, the number of repossessions grow and new mortgages become more difficult to acquire.”
In Birmingham, some housing associations are in negotiations with developers to turn incomplete or unsalable private housing into social housing for the growing army of people who cannot afford to get onto the housing ladder.
Over the last year in the West Midlands, despite 15,000 new homes being built, 8,740 more households were registered as being homeless.
Harvey Williams, the regional spokesman for the Royal Institution of Chartered Surveyors, said the economy had made times extremely tough for housebuyers at the bottom end of the market.