House prices are expected to fall by 2% next year as the property market fails to pick up according to the findings of the Royal Institution of Chartered Surveyors (RICS); prices are not expected to slip by more than 5%, and house repossessions are expected to fall somewhat.
The Royal Institution of Chartered Surveyors puts together their monthly figures from the reports of their estate agent members. RICS have deduced from the reports that prices will likely slide through the coming months, however, the lack of homes for sale is expected to prop up the market by providing a platform for the market to stabilise in the first half of 2011, meaning prices could be on the rise by the end of 2011.
RICS Chief Economist, Simon Rubinsohn explained: 'The lack of supply in the market is likely to prevent significant house price declines in 2011. The narrowing gap between supply and demand will see the gentle downward trend in prices currently taking place at least partly reversed as the year wears on. Transactions levels will remain flat as mortgage lending remains subdued for another year with many first-time buyers struggling to meet their aspirations of home ownership.'
The RICS report and commentary has long been a closely watched indicator for the property market, the recent monthly figures have indicated tougher times ahead. RICS November report documented 44% more of their member estate agents have recorded fallings prices, instead of rising prices last month as buyers appear to avoid the property market.
The 2011 property market is expected to be affected by public spending cuts having a larger impact on unemployment than at first thought. RICS said, 'Even in these circumstances, the lack of supply will prevent the decline in prices amounting to more than 5%.'
RICS’ 2011 predictions
• Repossessions down from 36,000 to 33,000 • House prices to fall 2% (but not more than 5%) • Mortgages to remain tight • Property transactions to remain flat and low at 900,000
As far as what may happen to house prices in your area, RICS explained, 'London the South East and the East of England have proved the most resilient parts of the country over the past year in terms of prices. The North East and the North West have been the weakest regions in England while Northern Ireland has continued to see the sharpest declines in house prices across the whole of the UK. In addition Scotland at the headline level has also seen a drop in prices. Our suspicion is the story for 2011 will not be that different.'
