In its latest Quarterly Economic Bulletin AMI went on to say current restrictions on the contributors to growth means the market is unlikely to see rapid improvements for the next five years.
The report records that the UK officially slipped back into recession in Q2, with a mixed picture on GDP and while many indicators show positive signs, eurozone turmoil and even public holidays could hold the economy back.
Unemployment is performing better than expected, perhaps explaining low productivity growth with inflation proving stickier than expected, but is on a declining trend.
With export demand hit by problems abroad, corporate investment low, household real incomes under a sharp squeeze and government spending being cut, there is no obvious stimulus for rapid growth.
Robert Sinclair, director of AMI, said: “Although gross mortgage lending jumped in Q1 due to first time buyers rushing to complete house purchases ahead of the end of the stamp duty holiday in April, remortgaging values remain subdued.
“There is little sign of real energy returning to the bottom of the market with few mortgage options available.
“We expect gross lending this year to be under £135bn despite the good start to the year.
“Due to lenders restructuring their balance sheets this is now unlikely to increase significantly during 2013 and 2014.”
AMI said the housing market remains volatile and London continues to lead the way with higher prices, although the trade body has concerns over the impact of the new stamp duty band for homes valued over £2m.
It said this change will significantly impact on larger buy-to-let investors and property investment companies.
Sinclair added: “The lack of credit combined with negative real income growth provides little impetus and with rents remaining close to record highs, we are at a decision point in the cycle.”
