Daoud Fakhri, an analyst at Datamonitor, says recent price increases were unconvincing and were driven by property shortages rather than demand.
He adds: “As more property has come onto the market, the low level of demand has come back into play, depressing prices once more. It is likely that prices will remain static, or even fall, for some time to come.
“Demand for property will remain low for the foreseeable future, due both to the lack of consumer confidence and to the ongoing shortage of mortgage finance, which continues to affect first time buyers particularly.”
Fakhri is responding to the Royal Chartered Institution of Chartered Surveyors UK Housing Market Survey which shows prices dropping in July for the first time in a year.
Based on the opinions of surveyors, it reveals 8% more surveyors reported a fall rather than a rise.
Expectations for the future were also low with 28% more surveyors expecting a fall in prices in coming months.
Fakhri adds: “If prices continue to fall, low or negative equity could become an issue once more, which will further impede the market, as most lenders are still strictly rationing high loan-to-value mortgages. The outlook for the mortgage market, therefore, could best be described as poor-to-uncertain.”