Expect further drop in house prices but sales should rise

Published on Tuesday 23 December 2008 20:42

HOUSE prices look set to dive by a further 10 per cent during 2009 but sales levels should begin to pick up, it was predicted last night.

The Royal Institution of Chartered Surveyors (RICS) said it expected the average cost of a home to drop by at least 25 per cent from its peak in 2007.

It warned that the on-going caution among mortgage lenders and the worsening economic climate looked set to lead to further house price falls during the coming 12 months.

But it added that recent RICS housing market surveys suggested activity levels may have reached the bottom and there could be a 10 per cent increase in the number of sales next year.

The number of enquires received from new buyers recently rose to its highest level since 2006. However, RICS said the key to turning these enquiries into actual sales would be the availability of mortgages.

Mortgage approvals are currently running at around 30,000 a month, well down on the 129,000 during one month at the height of the lending boom.

Figures released yesterday from the British Bankers' Association showed that the number of mortgages approved for house purchase fell by more than 60 per cent during the past year.