House prices predicted to fall despite current rise

House prices are predicted to fall by 1.6% in the first half of 2010, despite an expected rise in the second half of 2009 and it will take another 5 years before the peak house prices of 2007 are reached again.

These house price predictions are part of a report by the Ernst & Young Item Club.

Not only is it expected that house prices will fall in the first half of 2010, but after that there will be a 2 year period of stagnation.

A sustained recovery in house prices is not expected to begin until 2011, at which point it will be driven by improvements in the wider economy coupled with a housing shortage.

Prices will continue to be hit by difficulty in obtaining mortgages, particularly affecting first time buyers. Rising unemployment will also play its part.

The recent rise in house prices is explained as being the result of a lack of new properties being put on the market for sale.