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House prices: Surveyors expect property prices to fall

St Ives houses
Image caption Most surveyors expect house prices to fall in the next few months

Surveyors are expecting house prices to fall in the coming months owing to more home sales and economic uncertainty.

The rise in supply means more are expecting property values to fall than rise - a shift in sentiment from a similar poll a month ago.

The survey, from the Royal Institution of Chartered Surveyors (Rics), said that the number of inquiries from new buyers dipped in July.

This was only the second fall since the latter part of 2008.

Meanwhile, official government data for house prices show they rose by 0.7% in May, leaving the average 11% higher than a year ago at £209,505.

But the report, produced by the Department of Communities and Local Government (DCLG), points out that its figures are based on actual completion prices, rather than those produced by commercial organisations, which use asking prices, and reflect more recent trends.

Prices, according to the DCLG, are still 4.5% below the recent peak in its index, seen in January 2008.

A separate forecast by accountants PricewaterhouseCooopers has suggested that house prices might not reach the levels seen at the peak of the market for another decade.

Outlook

Interest from buyers fell for the second time since October 2008, the Rics survey showed.

This was partly because potential buyers were uncertain about the outlook for the economy in the coming months as government cuts start to bite.

However, sellers have been returning to the market - and at levels not seen for three years, the poll showed. This was driven, in part, by the decision to abolish Home Information Packs (Hips), the group said.

"A shortage of stock has been one factor holding back transaction activity in the housing market but the abolition of Hips is helping to belatedly address this issue," said Rics spokesman Jeremy Leaf.

"This is likely to be reflected in higher sales numbers over the coming months. However, with supply of property now beginning to outstrip demand there is a risk of some modest slippage in prices during the second half of the year."

Hips had been introduced in 2007 as a way of speeding up the house buying process, but were unpopular. Only the requirement for sellers to provide an energy performance certificate will remain.

Sales were expected to continue rising, the group said, with typical surveyor having sold about 17 homes in the three months to July.

'Stability'

One of the surveyors asked in the poll, Richard Sayer, of Northumberland, said: "Prices have not increased in our area and increased stock should remove that potential upward pressure.

Image caption The changing value of homes can depend on geography

"Post-election and Budget we must hope for stability."

Another surveyor, Stephen Gadsby, of Derby, said: "June has seen a continuance of the more favourable market conditions experienced in May. The increase in new instructions was mainly a result of the removal of Home Information Packs."

Price predictions vary across the country, but surveyors in London and Scotland were still expecting prices to rise in the coming months.

PricewaterhouseCoopers said it expected prices to be flat for the second half of 2010, with a full price recovery taking many years.

"Although the average UK house price overvaluation of around 25% in mid-2007 is now down to around 5-10% despite the market rally since March 2009, our analysis suggests that house prices remain vulnerable to setbacks," said the firm's head of macroeconomics, John Hawksworth.

"The possibility of a renewed fall in house prices over the next few years, particularly in real terms, cannot be ruled out as mortgage interest rates start to rise again."

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