Over the past few months property prices have seen slight increases following eighteen months of dramatic falls, and for many this has indicated that the property slump is over and that the market is getting back onto an even footing.

However, some industry officials have warned that this could be a temporary situation, and that it is too early to assume that the property market is improving because the property price increases may be unsustainable.

One recent report has claimed that the current revival in property prices in the UK cannot be sustained, adding that in 2010 property prices will fall by a further 7 percent.

Since February property prices are said to have increased by over 8 percent, but some industry experts have said that the house price increases will start to fall away towards the end of this year, and will start to fall over the course of next year.

One industry official said: ‘The unforeseen and seemingly irrational pick-up in prices has altered the outlook for UK house prices but it is likely that this recovery will prove temporary. The economic fundamentals that have supported the upturn, most notably the constrained supply of housing for sale, will be eroded as unemployment hits a peak and mortgage lending remains weak.’

He added: ‘While the recent improvement in the market is encouraging, it is impossible to ignore the short-term risks posed to the UK residential sector by rising unemployment and poor credit availability. We anticipate the current market revival to be unsustainable and predict a further contraction in prices during 2010 by -7%.’

Another official said, however, ‘Whilst some commentators believe that prices have further to fall, the increase in prices over the last four months tentatively suggests that the market has bottomed out and that we are slowly climbing out of the trough.’

Leave a comment