Page last updated at 04:16 GMT, Thursday, 6 August 2009 05:16 UK

'No quick return' to housing boom

For sale sign
The housing market has stabilised over the last few months

There is little chance of a quick return to a housing boom despite the possibility of UK prices rising over the course of the year, surveyors say.

The Royal Institution of Chartered Surveyors has changed its forecast of a price fall of 10-15% this year amid a "considerable shift" in the market.

But it warned that tight credit, limited transactions and job losses could see prices slip back in 2010.

The outlook for the next year to 18 months remained "clouded", Rics said.

It said its new prediction of positive house price growth did not indicate a quick return to the boom time as activity remained very weak by historical standards.

Recent surveys from the UK's two main mortgage lenders, Halifax and Nationwide, have also suggested that house prices are rising.

There is no doubt that the market is in a considerably stronger position than a year ago
Gary Smith, National Association of Estate Agents

RICS senior economist Brigid O'Leary said: "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."

However, the outlook for 2010 was uncertain and there was a risk of prices falling again.

"Affordability is still stretched and mortgage finance, while improving, is fairly hard to come by."

New buyers

The proportion of surveyors reporting more enquiries from new buyers has been accelerating since last November, Rics said in its housing market update.

They were attracted by the rapid fall in prices, the stamp duty holiday and the lower cost of mortgages.

The number of mortgages approved for house purchases has grown in recent months, although the range of mortgages available has shrunk - with fewer providers in the market - and higher savings have been needed for potential homeowners to pay a deposit.

Yet transaction levels remained well below the long-term average, said Rics and it argued that a "more orderly" market was still some way off.

Increases in mortgage rates, rising unemployment or a prolonged weakness in the economy could all challenge the emerging recovery in the market, it warned.

The number of homes being built has also been hit by the recession and this could also affect the affordability of homes in the future, it added.

Meanwhile, the National Association of Estate Agents said the housing market had remained firm during July, in the face of the traditional summer dip in activity.

Gary Smith, president of the NAEA, said: "Estate agents expect a drop in activity over the summer months, but there is no doubt that the market is in a considerably stronger position than a year ago.

"Agents sold more [properties] in July than in any month last year. That is concrete evidence that the housing market, while not recovered, has potentially been through the worst."

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