RICS upbeat on house prices for 2009

6 August 2009

In its Housing Market Update RICS says it no longer expects house prices to fall by between 10% and 15% this year.

Instead it forecasts the average house price at the end of the year to be slightly higher than in Q4 2008.

RICS is also optimistic that mortgage approvals will increase.

The trade body believes that the continued rise in new buyer enquiries is set to push mortgage approvals to 55,000 a month with approvals staying around that level throughout 2009, with gradual increases in 2010.

This means that potentially mortgage approvals could end 2009 nearly twice as high than at the end of 2008, RICS says.

But RICS points out that transactions remain well below the average and that housing supply is still a long-term problem.

Brigid O'Leary, senior economist at RICS, says: “Affordability is still stretched and mortgage finance, while improving, is fairly hard to come by.

“The positive news we have seen has been a recovery from record lows and there are still many uncertainties in the economy.

“In particular, we are concerned about the mortgage finance environment and the impact of further increases in unemployment on house prices.”

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