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RICS: House prices to fall 2% in 2011

House prices next year will finish 2 per cent lower than at the end of 2010, according to the Royal Institution of Chartered Surveyors.

RICS says house transactions are likely to remain flat next year but repossessions will decline marginally.

It estimates transaction levels of 900,000 for 2011 and a fall in repossessions from 36,000 in 2010 to 33,000.

Last week, the Council of Mortgage Lenders predicted there will be 860,000 house transactions in 2011, down from 890,000 in 2010. It also said the number of repossessions would increasing slightly from an estimated 36,000 this year to 40,000 next year.

RICS also says that while prices are likely to slip over the coming months, falling supply should allow the market to stabilise in the first half of 2011. RICS states house prices should begin to edge up in the second half of the year, ending the year at levels similar to now.

It says a bigger than expected impact from spending cuts could further depress buyer interest. But RICS believes, even in these circumstances, the lack of supply will prevent a fall in house prices of more than 5 per cent.

RICS chief economist Simon Rubinsohn says: “The lack of supply in the market is likely to prevent significant house price declines in 2011. The narrowing gap between supply and demand will see the gentle downward trend in prices currently taking place at least partly reversed as the year wears on.

“Transactions levels will remain flat as mortgage lending remains subdued for another year with many first-time buyers struggling to meet their aspirations of home ownership.”

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  1. Why do they bother with predictions? They are always inaccurate and just cause confusion and very often false assumptions from vendors and purchasers alike

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