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Thursday 24th of September 2009
July 24, 2009    

Housing market to slump until 2012

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by Gill Montia

The National Institute of Economic and Social Research is predicting that the UK housing market will only return to growth in 2012.

The forecast, from Britain’s oldest independent economic research body, assumes that recent reports of “green shoots” are purely down to a lack of properties for sale, and will be short-lived.

With mortgage approvals for house buyers having plummeted 40% on a year ago and showing a 65% decline on pre credit crisis days, the institute dismisses talk of house price stabilisation and recovery.

The latest survey from the Royal Institution of Chartered Surveyors (Rics) does not initially appear to support this view because the balance of its members seeing falling (rather than rising) prices improved in June, to give the best reading since September 2007.

However, the ratio remained in “deeply negative” territory and came against a backdrop of falling stocks on estate agents’ books.

The Rics is therefore doubtful that there will be a sustained market upturn while mortgage lending remains tight.

Both opinions are at odds with vendors’ expectations, as Rightmove reported a 0.6% rise in asking prices in July.

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