Interest rates and a loosening of mortgage restrictions will be key to the fortunes of the housing market next year, the chief executive of the National Association of Estate Agents (NAEA) has predicted.
The housing market has experienced something of a slump in the second half of this year, as prices have fallen as a result of a fall in demand and an increase in supply.
Figures show that house prices are at almost exactly the same point as they were 12 months ago.
Peter Bolton King has said that any recovery will be strongly dependent on the UK's major lenders making more finance available.
Research from Moneyfacts.co.uk has found that the number of mortgages available is currently at its highest point for the last year.
The greatest gains have been seen in the mid loan-to-value (LTV) range, although the number of deals available to those with smaller deposits has also risen.
However, Bank of England figures show that the number of mortgage approvals fell to an eight month low in October, suggesting that providers are sill nervous about lending.
"The housing market remains in a state of fragile recovery as the year ends. Frankly, however, this recovery is threatened by the stubborn refusal of major lenders to loosen their self-serving restrictions on mortgage lending," said Peter Bolton King.
He also said that the monthly wait for the decision on the base rate of interest will be a nervous one for existing and potential borrowers.
The historically low 0.5% rate has helped keep the number of repossessions and arrears down since the economic downturn, as many people have seen the repayments on their mortgages dwindle.
These people have been warned that the base rate rise could well be on the horizon.
"A historically low rate of interest has benefited those people who already have a mortgage, but it is likely that over the next 12 months it will rise," he said.
"That will place more pressure on existing borrowers but also remove mortgages from the reach of even those house buyers with large deposits."
Mr Bolton King also predicted that 2011 could see the rise of 'postcode power', as premium areas emerge from the slump at a faster rate than others.
"As demand for property in some areas fuels a healthy market while other, less desirable areas are in danger of being left behind," he said.
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