Property prices to be higher at end of this year than the last

It has been predicted that at the end of this year house prices will be higher than they were at the end of last year, with many industry experts expecting a slight rebound in both the property market and the economy.

Officials from the Royal Institute of Chartered Surveyors have changed their prediction, which originally was that property prices would be around 10 to 15 percent lower at the end of this year compared to last year.

However, RICS has said that whilst caution still needs to be exercised it is looking far more likely that this will not be the case, stating: “It now looks likely that the average house price in the fourth quarter of 2009 will be slightly higher than in the fourth quarter of 2008.”

This has been backed up by data from a number of mortgage lenders, which has shown that property prices have been increasing slowly following eighteen months of falls that saw around 20 percent wiped off the average property price.

There is concern that whilst things look more encouraging at the moment any upward movement in the base interest rate, which is currently at its lowest level in history at just 0.5 percent, then this recovery could be adversely affected.

One official said: “The elephant in the room is the huge contingent losses sitting on UK bank’s balance sheets, which are directly linked to the UK mortgage market. The losses incurred by UK banks so far have been largely due to the performance of the US market; but the next wave of write-downs will be made in the UK.”

A report from RICS state that “there is still a danger of prices slipping back again in 2010.”

It also went on to state: “It is not clear that house prices have reached a bottom. In the current market, limited supply is at least as important as improving demand as a determining influence on house prices.”

Tags: industry experts, Chartered Surveyors, market, case, bank, housing market