Lack of houses will prevent significant drop in house prices in 2012
Share
The Royal Institution of Chartered Surveyors says it predicts house prices to fall by 3% in 2012, but says a lack of houses will prevent any significant decline.
In its Housing Market Forecast it says sales may rise a little - transaction levels are likely to see a slight resurgence next year and climb back to around 880,000, roughly the level of activity recorded in 2010.
But Simon Rubinsohn, chief economist at RICS, says that to put this in context, total sales in 2006 were almost double this amount at 1.67 million.
He says: “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.
“While the government’s recently announced mortgage indemnity scheme is designed to help up to 100,000 buyers on to the property ladder, this is likely to have limited impact as it is restricted purely to new-build properties.”
RICS also predicts that 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.
Elsewhere, the residential lettings market will continue to perform well in 2012. Demand for rental properties remained strong throughout 2011, as many first-time buyers were unable to access the sales market.
Though the gap between demand and supply is shrinking, suggesting that the increase in rental values may begin to slow as the year wears on.
But Rubinsohn adds: “The general economic climate is likely to be the biggest influence on the residential property market next year.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
