Residential property values are likely to start rising again by relatively modest proportions during the first months of 2010, with the Royal Institution of Chartered Surveyors estimating an increase of only around 2%. A more significant recovery, however, is unlikely in the coming months, as the economy will almost certainly continue to stagnate and unemployment will remain high for much of the year. In fact, RICS suggests that some of the value increases in early 2010 may be negated if prices start to drop again later in the year, as mortgages remain scarce and first-time buyers find it difficult to enter the property market.
In contrast to predictions released by RICS, Hamptons International’s prognosis is somewhat more positive. The organization expects values to rise anywhere from 3% to 5%. But both Savills and Capital Economics see property prices falling, from a minimum of 6.6 percent, to as much as 10 percent. An analytical piece published in The Times, however, calls for caution when exploring these predictions, as the most respectable organizations have had difficulty deciphering the precise course of the recession and real estate slump. While many experts assumed that 2009 would bring a long series of declines in property values, most of this depreciation happened early in the year and prices began rising through much of the UK in the early summer months. Repossessions in particular were lower than what was previously predicted, in part thanks to the fact that mortgage interest rates fell by significant proportions.
Some of the most impressive growth in 2009 occurred in the London area, particularly in Chelsea. Foreign demand was strong in this area—especially among Italian investors—and Nationwide found that prices rose by around 5.9 percent nationally.
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