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22 December 2010

RICS: house prices to lose 2% in 2011

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by Gill Montia

RICS: house prices to lose 2% in 2011

In its forecast for 2011, the Royal Institution of Chartered Surveyors (RICS) says it expects UK house prices to finish the year 2% down.

While the value of the average home is likely to continue to slip over the coming months, falling supply should stabilise the market at some stage before July, with prices possibly edging up again in the latter part of the year.

However, a “key risk” to this scenario is worse than expected fall out from public spending cuts, translating into high unemployment and depressed buyer interest.

Even so, surveyors are confident that in 2011, a lack of supply will prevent a fall of more than 5% in the average house price.

Turning to sales, these are expected to remain flat, at around 900,000, over the whole of next year, with availability of mortgage finance the main stumbling block in market activity.

Meanwhile, repossessions are likely to fall back marginally.

In 2010, around 36,000 homes have been taken into possession by lenders but the RICS estimates that the number will decline to 33,000 in 2011.

Finally, RICS chief economist, Simon Rubinsohn, warns of “another year with many first-time buyers struggling to meet their aspirations of home ownership”.

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