Rics: House prices expected to rise due to house shortage

Kay Mitchell | | 0 Comments

The Royal Institution of Chartered Surveyors (Rics) believes that house prices will rise over the next few months due to a shortage of homes for sale.

According to Rics, part of the renewed optimism within the housing market comes as a result of demand from new buyers outstripping supply.

The organisation said just 8% more surveyors reported seeing price falls than those who said the cost of homes increased – this represents the lowest figure for two years.

Furthermore, 29% of surveyors predicted sales levels would rise going forward.

However, Jeremy Leaf of Rics, cautions: “Although demand for property is continuing to rebound, it still remains low from a historical perspective.”

“Crucially it is the lack of supply that is helping to underpin prices at the present time. Significantly, the more positive news on prices – at least in some parts of the country – may prompt more properties to come on to the market,” adds Mr Leaf.

Mr Leaf also warns that a lack of mortgage funding and rising unemployment could hinder a recovery in the property market.

Last week, Rics scrapped its original forecast of house price falls of 10-15% in 2009. Instead, the organisation said it 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.

Meanwhile, yesterday the Centre for Economics and Business Research (CEBR) said it expects house prices to lose a further 3% of their value during the remainder of 2009, before bottoming out and rising just 2% in 2010.

Benjamin Williamson, CEBR economist, said: “Our view is that the extent of house price falls already seen means further significant falls are unlikely.”

According to the CEBR, house prices will have fallen by around 24% from their peak in autumn 2007, using the Halifax’s monthly house price survey as the benchmark.

Last week, the Halifax reported a 1.1% rise in house prices in July, while independent financial adviser firm Bestinvest said that house prices have bottomed out and confidence in the property market will grow over the next few months.

Tags: Centre for Economics and Business Research, for sale, homes, house prices, recovery, Rics, rise, Royal Institution of Chartered Surveyors, shortage, unemployment