House prices expected to end the year higher than they started

House prices are expected to end the year higher than they started, surveyors have predicted.

By Myra Butterworth, Telegraph Personal Finance Correspondent

Published: 7:00AM BST 06 Aug 2009

The Royal Institution of Chartered Surveyors revised its house price forecast saying values would end the year on a slight rise, having previously suggested they would fall by 10 per cent in 2009. However, it said the outlook for next year is “fairly uncertain” and did not rule out further prices falls.

Related Articles UK house prices: it’s now ‘reasonable’ that they end 2009 higher, Nationwide says Sterling rallies on the back of inflation figures Record jump for housing construction Housing market to recover quicker than economists first feared Housing slump will end by Christmas, predict economistsIt changed its forecast following a “considerable shift in sentiment” in the housing market during the past few months, which saw prices starting to pick up in some regions. But it warned transaction levels are still relatively low, with sales being hampered by the lack of affordable mortgages. Brigid O’Leary, senior economist at RICS, said: “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. “However, the outlook for 2010 is fairly uncertain and there is a real risk that prices may slip back again. Affordability is still stretched and mortgage finance, while improving, is fairly hard to come by.”

It comes as Halifax also revised its house prices estimates, saying values will fall by only half the amount originally forecast this year. Britain’s biggest lender revised its forecast for house price falls, saying values would drop 7 per cent rather than 15 per cent during 2009. But it would still mean the average home in Britain would see £10,000 knocked off its value by the end of 2009 as several recent increases mean prices have only dropped 1 per cent so far this year.

House prices actually increased for the third month in a row. The housing market is beginning to show signs of stabilising as Halifax’s figures showed that prices in July rose 1.1 per cent to an average of £159,623.

Halifax’s revised forecast would see average house prices end the year at £149,600, rather than at the previous estimate of £136,700. The latest monthly drop brings the annual rate of decline in July to 9.9 per cent, down from 17.8 per cent just months earlier in April. Martin Ellis, Halifax’s housing economist, said: “Demand for homes has risen, albeit from a very low base, since the start of the year.” And Howard Archer, an economist at Global insight, said: “House prices have been supported recently by a lack of new properties coming on the market.” He added: “It continues to be very difficult for many people to get mortgages.”


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