House prices forecast to end year on a high
There’s more optimism in the housing market today, with the Royal Institute of Chartered Surveyors (RICS) predicting house prices will end the year higher than they started.
Following a strong start to the summer, RICS has changed its earlier forecast of a 10%-15% fall in 2009 made at the start of the year, due to a "considerable shift in sentiment". It said it now looks likely that house prices in the fourth quarter of 2009 could be slightly higher than the same time last year.
However, RICS stressed that this does not indicate a quick return to the boom time, as activity remains very weak by historical standards and a return to a more orderly market is still some way off.
While buyer demand has improved, RICS said further increases in mortgage rates, rising unemployment or prolonged weakness in the economy could all challenge the emerging recovery in the market.
RICS senior economist Brigid O'Leary says: "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 kind of house price falls widely predicted at the start of the year.
"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 from here in the short term."
However, O’Leary warns that the outlook for 2010 is fairly uncertain and there is real risk that prices may slip back again.
"Affordability is still stretched and mortgage finance, while improving, is fairly hard to come by."
The RICS housing market update follows recent surveys from the UK’s two largest mortgage lenders, Nationwide and Halifax, that both reported increases to house prices in July.
Another housing market survey, released by the National Association of Estate Agents (NAEA) today, also suggests that the housing market has entered the summer months in a far stronger position than 12 months ago.
The report states that traditionally July and August are one of the low points of the year and a dip in activity is to be expected compared to June. However the NAEA says the market remains robust relative to this time last year, with an increase in agreed sales and the number of properties on the market.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.