RICS Predicts Early Increases in House Prices

In its latest report, the Royal Institution of Chartered Surveyors claimed that UK housing prices will increase as soon as in the year of 2010, thus reversing its own prediction of a 15% decline in the sector. On Thursday, August 6th, RICS made a statement, which suggested that property values might start to slightly rise in the 4th quarter of 2009 as a result of increased buyers’ activity on the property, which was caused by lowered interest rates and house prices. In its report, RICS also noted that UK property values have actually increased almost twice as much as it had been expected along with consumer confidence, which reached the highest level in more than 12 months. RICS economist, Mrs. Brigid O’Leary, claimed that the UK property market has seen a significant change in the past few months. Despite that fact, in her opinion, the future of the industry is still uncertain, meaning that UK property values might slip back once again. In December 2008, the RICS’ prediction suggested that UK property prices will decline 10-15% in the course of 2009; currently, Lloyds Banking Group Plc’s shows that house prices are approximately 20% lower than they were on the housing peak in 2007. According to Halifax, house prices in the United Kingdom rose by 1.1% in July to an average of £159,623with homeowners expecting them to further increase by 0.5% in the next 6 months. RICS specialists noted that rising unemployment coupled with limited lending and increasing interest rates on mortgage loans might hamper the recovery in the housing market. They also add that the above-mentioned factors will not allow the property market to return to the peak time as the current level of market activity is extremely low according to historical standards. The statement finds its proof in the report published on August, 6th by the Bank of England, which says that the recession turned out to be deeper than previously thought. The BOE kept the base rate at the level of 0.5%.