Property sales to rise, but house prices to fall in 2012Thursday, 22 December 2011 11:02
House prices are expected to fall next year as the fragile economic outlook continues, a new report suggests.
According to the RICS Housing Market Forecast published today, headline price levels are set to drop by around three per cent across the country.
But the low level of supply should continue into the coming year, stabilising prices and preventing major declines, it added.
Property sales are likely to rally to around 880,000, a similar level of activity to that recorded in 2010.
However, this is still substantially lower than the 1.67 million sales recorded in 2006, prior to the financial crisis.
The weak economic picture anticipated for the next six months, along with the prospect of increased unemployment, means that demand to buy property is unlikely to see any significant increase and will remain relatively flat, according to the report.
And while the Government's recently announced mortgage indemnity scheme is designed to help up to 100,000 buyers on to the property ladder, this is likely to have limited impact as it is restricted purely to new build properties, RICS said.
Chief economist Simon Rubinsohn said: “The general economic climate is likely to be the biggest influence on the residential property market next year.
“Transaction levels should see a slight increase, although mortgage lending is likely to remain subdued which will limit the scope for improvement.”