House prices will fall further

[LRE]

House prices will fall further



The Post Monitoring

House prices will probably fall by another 10% in the coming year, predicts the Royal Institution of Chartered Surveyors (RICS).

That would produce an eventual price drop of 25% from the peak recorded in the summer of 2007 - the biggest ever. The annual forecast from Rics suggests that property sales may have bottomed out and could rise by 10% during 2009. But Rics says the government must take action to restore the flow of mortgage funds to borrowers.

"The numbers are going to get worse before they get better", warned the trade body's chief economist Simon Rubinsohn. "Lenders are likely to remain cautious in the near term in the absence of any guarantees on mortgage backed securities. "This, coupled with an increasingly gloomy economic picture, suggests that house prices will continue to decline in 2009," he added. The past year has seen an unprecedented slump in house prices and sales. A serious housing shortage will fuel another bout of volatility once the current crisis eases. So much so that leading lenders like the Halifax and HBOS, and their trade body the Council of Mortgage Lenders (CML), have been deterred from making any forecasts for next year. "Uncertainty surrounding any forecast is much greater than is usually the case," Mr Rubinsohn said. Unlike those other commentators Rics is still willing to make a formal forecast. As well as a 10% price drop, and 10% increase in sales, it says there will be a further big decline in house building.

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