Industry officials have recently predicted that property values in the UK could be higher at the end of this year than they were at the end of last year.

Officials have said that the property slump seems to be experiencing some degree of recovery, but added that caution was still necessary.

Officials from the Royal Institute of Chartered Surveyors had predicted that house prices would be 10-15 percent down on last year but have now said: “It now looks likely that the average house price in the fourth quarter of 2009 will be slightly higher than in the fourth quarter of 2008.”

Data has shown that over the past eighteen months around 20 percent has been wiped off average property values in the UK, but it now seems that property prices are starting to recover following the released of data from major mortgage lenders such as Halifax and Nationwide.

However, some officials have said that this recovery could be hampered if the Bank of England decides to increase its base interest rate over the coming months from its current level of 0.5 percent, which is the lowest it has ever been. It is thought that this could have a serious knock on effect on the UK’s banks.

One official said: “The elephant in the room is the huge contingent losses sitting on UK bank’s balance sheets, which are directly linked to the UK mortgage market. The losses incurred by UK banks so far have been largely due to the performance of the US market; but the next wave of write-downs will be made in the UK.”

Some banks have also expressed concern over the sustainability of any recovery in the property market, even though there has been some positive reports over the past month or so. The report from RICS stated that “there is still a danger of prices slipping back again in 2010.”

It also stated: “It is not clear that house prices have reached a bottom. In the current market, limited supply is at least as important as improving demand as a determining influence on house prices.”

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