House price reduction predicted

24-Dec-2008

First-time buyers (FTBs) in 2009 could end up choosing from properties that have declined around ten per cent from their current value.

According to the Royal Institution of Chartered Surveyors (Rics), FTBs and other home purchasers could be faced with a new year market that has a peak-to-trough price drop of at least 25 per cent.

Perhaps encouragingly for those getting their first property, Rics' recent housing market surveys indicate that house sales may increase by over ten per cent throughout the year.

This comes after new buyer enquiries, which will include those looking to get on the first rung of the housing ladder, are currently at their highest level for more than two years.

Rics chief economist Simon Rubinsohn said: "Lenders are likely to remain cautious in the near term in the absence of any 'guarantees' on mortgage-backed securities."

When weighing this up with the "gloomy economic picture" that has been painted for the year ahead, it is likely that house prices will decline in 2009, he added.

Earlier this month, the Council of Mortgage Lenders revealed that 15,400 home purchase loans were approved for FTBs during October - this constituted an increase of 15 per cent on September's figures.

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