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Rise in house sales predicted in 2012

Rise in house sales predicted in 2012

Category: Mortgages

Updated: 22/12/2011
First Published: 22/12/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Sales of homes in the UK could rise in 2012, but property prices will struggle to follow suit.

The Royal Institution of Chartered Surveyors (RICS) predicts that the number of homes sold in the UK will rise to 880,000 next year – roughly the same level of activity as seen in 2010.

However, even if the property market does improve slightly, levels will still be down on previous years, with total sales in 2006 almost double this amount at 1.67 million.

Prices are likely to fall slightly, said RICS, but any large-scale declines will be averted because of low levels of supply.

"The weak economic picture anticipated for the next six months, along with the prospect of increased unemployment, means that demand to purchase property is unlikely to see any significant increase and will remain relatively flat," it said.

It is hoped that the Government's indemnity scheme will help some first time buyers gain a footing on the property ladder, although the initiative is expected to have a limited impact as it only benefits those buying a new build house.

"The general economic climate is likely to be the biggest influence on the residential property market next year," said Simon Rubinsohn, RICS chief economist.

"Prices could edge a little lower as unemployment continues to rise. However, the lack of supply in the market is likely to prevent any significant house price declines.

"Transaction levels should see a slight increase, although mortgage lending is likely to remain subdued which will limit the scope for improvement."

Other areas of the housing market are expected to fare better, with demand in the rental sector expected to remain strong.

RICS has predicted that the lettings market will remain firm which means that rents are likely to increase further, albeit at a slower pace than in 2011.

Meanwhile, despite the prospect of growing unemployment, repossessions will see only a very marginal increase in 2012.

The number of repossessions for this year is likely to be around 35,000 and, although next year's figure may be slightly higher, the total number of properties taken into possession over the next 12 months should not exceed 40,000.

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