According to a report published by the Royal Institute of Chartered Surveyors (RICS), home prices will fall by 2% in 2011 compared prices in recorded in 2010.
The RICS study said that repossessions will fall marginally in 2011 although home transactions are expected to remain flat.
It pegs the repossessions figure at 33,000 for the year compared to 36,000 recorded last year. House transactions have been estimated at 900,000 units for 2011.
The Council of Mortgage Lenders (CML) had published their estimates last week, forecasting 860,000 house transactions – compared to 890,000 units in 2010. It however, forecasted a higher number of repossessions at 40,000 compared to 36,000 in 2010.
RICS report says that prices will dip in the first half of the year till supply of homes drop and the market stabilises. The prices are expected to climb in the second half of the year and prices at the end of the year should be similar to current levels.
RICS believe that a bigger than anticipated cut in government spending could drive away more buyers from the market. However, it does not expect homes to depreciate beyond 5% of present prices.
Simon Rubinsohn, Chief Economist of RICS said: “The lack of supply in the market is likely to prevent significant house price declines in 2011. The narrowing gap between supply and demand will see the gentle downward trend in prices currently taking place at least partly reversed as the year wears on.
“Transactions levels will remain flat as mortgage lending remains subdued for another year with many first-time buyers struggling to meet their aspirations of home ownership”.