House prices to rise in 2010, says RICS

Updated: 04:48 EST, 22 December 2009

British house prices will rise by 1-2 per cent next year, according to the Royal Institution of Chartered Surveyors.

Gains in the first few months of 2010 will be followed by stagnation and modest falls in the second half of the year.

British house prices fell to a five-year low in early 2009, but have since rebounded by 10-15 per cent from their low point, giving a 2.7 per cent rise for the year to November, according to mortgage lender Nationwide's index.

RICS forecast last year that this index would fall by around 10 per cent over the course of 2009.

House prices hit a five-year low in 2009, but have rebounded 10-15%

For 2010, RICS said an initial upward effect on prices caused by a shortage of property relative to the number of registered buyers would fade.

'The combination of more available property and the beginning of the exit strategy from the big stimulus programmes that have helped support the economy will gradually exert a greater influence,' said Simon Rubinsohn, RICS's chief economist.

The volume of property transactions would probably rise to about 70,000 a month by the end of the year, up from around 55,000-60,000, RICS forecast.

Mortgage approvals would follow a similar pattern, RICS added.

House prices in London were likely to outperform those in the rest of Britain, continuing 2009's trend, because of recovery in the financial services industry, though the capital faced an added downward risk from increased taxes on bank bonuses and high earners' incomes.