A shortage of homes in the UK is expected to restrict the amount that the value of residential property falls by, the Royal Institution of Chartered Surveyors (Rics) has predicted. According to the organisation's housing market forecast, prices will slide by three per cent during 2012, representing some form of stabilisation in the sector. Rics also anticipates the volume of sales will see "a slight resurgence" and hit approximately the same level as recorded in 2010.
Rics chief economist Simon Rubinsohn commented: "The general economic climate is likely to be the biggest influence on the residential property market next year. Prices could edge a little lower as unemployment continues to rise. However, the lack of supply in the market is likely to prevent any significant house price declines." Figures recently published by the Home Builders Federation (HBF) revealed the supply problems in the UK's residential real estate sector are unlikely to improve in the near future.
According to the organisation, just 32,900 approvals for new homes were granted in England during the third quarter of 2011, down by ten per cent on the same period a year earlier. Stewart Baseley, executive chairman of the HBF, warned the low number of planning permissions in the pipeline is "storing up huge social and economic problems" for the years ahead. Brian Berry, director of external affairs at the Federation of Master Builders (FMB), has voiced his concern over the situation, adding that restricted mortgage availability is another challenge the market is facing.
Real estate investors who lease their properties out are expected to see a rise in rents, resulting from the constricted sales market. Mr Rubinsohn stated the rental market will "remain firm", although he predicted rent increases will slow down in 2012, compared to this year. Those looking for investment properties may be encouraged by estimations from Savills, with the firm recently suggesting the cost of renting will rise by 20.5 per cent in the mainstream UK market over the course of the next five years.