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House prices to rise in 2009 – RICS

House prices to rise in 2009 – RICS

Category: Mortgages

Updated: 06/08/2009
First Published: 06/08/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Evidence that the housing market is on the mend has been provided by the Royal Institution of Chartered Surveyors (RICS), which has revised its prediction for property price performance in 2009.

It previously expected the average price of homes in the UK to fall by around 10 to 15 per cent this year.

However, recent improvements have prompted a change in sentiment, with RICS forecasting a slight rise in the fourth quarter of 2009, compared with the same period last year.

An increase in buyer enthusiasm, which RICS first recorded in November last year, before reaching a survey high level in June, has been borne out by increasing numbers of mortgage approvals, from 27,512 late last year to 47,584 in May.

The announcement comes just a day after Halifax's house price index revealed that the average price of homes in the UK increased by 1.1 per cent in July.

"There has been a clear change in the housing market over the past few months and, as a result, it is unlikely that we will now see the house price falls widely predicted at the start of the year," said RICS senior economist, Brigid O'Leary.

"Instead, the return of buyer demand and the limited availability of housing on the market could be enough to support prices, so it wouldn't be surprising to actually see prices increase further in the short term."

A return to a more orderly market is still some way off, though, as a lack of new homes, growing unemployment and prolonged weakness in the economy could all hamper any real progress in the sector.

"The outlook for 2010 is fairly uncertain and there is a real risk that prices may slip back again. Affordability is still stretched and mortgage finance, while improving, is hard to come by," O'Leary added.

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