If demand for houses continues to be so much higher than the number of houses being put on the market then we could see house prices hit the same levels as before the credit crunch this year, according to the Royal Institution of Chartered Surveyors (RICS).
The British Bankers’ Association announced mortgage approvals held in November last year and are now rising. Following these figures, RICC issued this statement and their senior economist Oliver Gilmartin said:
“The BBA numbers add further weight to our view that house prices will continue to move higher during early 2010. Lending from mainstream banks has returned to levels last seen two years ago, although remains around 30% below the levels predating the credit crunch.
“The rise in demand continues to outstrip supply, although recent indications are that potential vendors that became ‘reluctant landlords’ at the start of the downturn, may be taking this improved pricing environment to place properties for sale.
“There are growing concerns that current momentum in the market will see house prices move close to pre-crisis highs in 2010 stretching affordability further. However, RICS expect the market to take a reality check in the second half of 2010, as longer term borrowing costs start to rise pushing the costs of funding for fixed rate mortgages upwards. But, despite some moderation in the second half of the year, house prices could well end the year marginally higher.”
Many may at first rejoice at hearing this news however, although the price rise might at first seem to be good news, following the move into credit crunch and the ensuing recession the last thing we need is to see buyers being forced into a choice between staying off the property ladder or taking mortgages at an unsustainable salary multiple.
It is for this reason that RICS’ prediction of a reality check in the latter part of the year is likely to hold true.