Mortgage market hit in 2009 but house prices set to rise in early 2010

An independent study by Aarkstore Enterprise has shown that the mortgage market has been hit hard by the financial crisis although some niche segments have proven to be more robust than others. Most mortgage products look set to face a slow recovery until 2013, with lenders facing high levels of risk aversion.

But the Royal Institution of Chartered Surveyors or RICS has said that the value of residential property would likely start showing signs of modest recovery during the first months of 2010. RICS estimated the sector to show an increase of around 2 percent in the early months of this year.

But RICS said that a more significant recovery would not happen in the coming months, as the economy would almost certainly continue to stagnate and unemployment would remain high for much of the year. In fact, RICS suggests that some of the value increases in early 2010 may be negated if prices start to drop again later in the year, as mortgages remain scarce and first-time buyers find it difficult to enter the property market.

But a separate study made by Hamptons International refuted RICS findings and pictured a positive outlook. The organization expects values to rise anywhere from 3 percent to 5 percent. Other studies made by Savills and Capital Economics see property prices falling, from a minimum of 6.6 percent, to as much as 10 percent.

Some industry insiders said that the feared series of depreciation of property values throughout 2009 actually occurred in the early months of last year while prices began to rise again through much of the UK in the early summer months. The expected jump in repossession cases did not materialise as mortgage interest rates fell significantly.

The London area posted the most impressive growth in property values last year, especially in Chelsea as foreign demand for properties in the area also increased, particularly among Italian investors.