House prices are expected to remain broadly flat during the coming year as the property market continues to face significant challenges, it was predicted today.
The Royal Institution of Chartered Surveyors (RICS) said it expected house prices to rise by between 1% and 2% during 2010, in line with increases seen this year.
The group said the number of properties for sale was likely to increase during the early part of the year, but supply would still struggle to keep pace with demand, leading to further price rises.
It added that the average number of properties chartered surveyor estate agents had on their books was likely to remain close to historical lows.
But it expects the gap between supply and demand to gradually narrow.
It said this, combined with the caution of lenders, the uncertain economic climate and a flat labour market, meant house prices would finish the year only 1% or 2% higher than they started it.
RICS said the increased number of homes put on the market would help to lift transaction volumes, with the number of properties changing hands rising from between 55,000 and 60,000 a month to around 70,000 by the end of the year.
Simon Rubinsohn, RICS chief economist, said: “The imbalance between supply and demand will continue into the early part of the new year resulting in some further house price gains.
“However, the combination of more available property and the beginning of the exit strategy from the big stimulus programmes that have helped support the economy will gradually exert a greater influence.”