House prices 'to remain high next year'

Landlords property insurance could be essential for those with high-value portfolios who need to protect their capital gains, particularly as it seems house prices will remain buoyant in 2012.

The Royal Institution of Chartered Surveyors' (RICS) Housing Market Forecast suggested falls in asking prices will be limited by a shortage in available residential real estate.

Furthermore, the private rented sector should see continued strength in the coming 12 months.

The body pointed to the fact first-time buyers have found it difficult to get a foot on the property ladder and this situation will probably extend into 2012 despite government attempts to encourage home purchase.

The leadership announced a mortgage indemnity scheme to try and boost the number of residential real estate transactions by 100,000, but RICS predicted any increase in sales will be modest.

Chief economist at the organisation Simon Rubinsohn said continued sluggishness in the purchase of houses will offer support to the private rented sector.

"The lettings market will remain firm which means that rents are likely to increase further, albeit at a slower pace than in 2011," he stated.

It was also suggested by the expert that the general economic climate, which is expected to remain weak, will be "the biggest influence" on the performance of real estate transactions.

"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," Mr Rubinsohn remarked.

RICS predicted declines in the value of abodes could reach three per cent, but are unlikely to go any lower.

One area that could see particularly buoyant house prices is London, where director at Douglas & Gordon Ed Mead recently said prime real estate is continuing to attract foreign buyers and is unlikely to see any dramatic changes in its fortune.

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Posted by Luella Ravelin