Rics notes ‘considerable shift’ in housing market

Permalink: Rics notes ‘considerable shift’ in housing market
by Kay Murchie

The Royal Institution of Chartered Surveyors (Rics) has scrapped its original forecast of house price falls of 10-15% in 2009.

Instead, the organisation has noted a “considerable shift” in the market and believes that despite the mortgage drought and rising unemployment, house prices may end the year slightly up.

The revision comes amid some renewed optimism within the housing market after the Halifax yesterday reported a 1.1% rise in house prices in July.

However, Rics points out that tight credit, low transactions and unemployment could mean house prices may fall again next year.

Brigid O’Leary, Rics senior economist, comments: “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.

“Instead, the return of buyer demand and the limited availability of housing on the market could be enough to support prices, so it wouldn’t be surprising to actually see prices increase further from here in the short term,” added O’Leary.

Meanwhile the National Association of Estate Agents said: “there is concrete evidence that the housing market, while not recovered, has potentially been through the worst.”

However, there are still mixed reports within the housing market after independent financial adviser firm, Bestinvest, said earlier this week that house prices have bottomed out.

According to Peter O’Donovan, head of mortgages at the firm, confidence in the property market will grow over the next few months.

However, the optimism is in stark contrast to a report by the National Housing Federation, who is predicting a slow recovery for house prices in England.

The body, which represents not-for-profit housing associations, is forecasting that house prices will fall by 12.2% this year and 4.6% next year. House prices will then stabilise with the organisation expecting house prices to be 20% higher than current values by 2014.