Rics: House prices likely to fall in 2012 as economy continues to falter

House prices are likely to fall next year as the difficult economic conditions in Britain continue, according to new research.

The Rics Housing Market Forecast published today (December 22nd 2011) suggested that headline level prices will decline by around three per cent across the whole of the UK.

However, significant declines will be prevented by a low level of supply.

Although transaction levels should increase to approximately 880,000, this is much less than the 1.67 million witnessed before the recession in 2006.

The continuing stagnation was blamed upon insecurities about jobs next year, with people seemingly wanting to wait and see how their economic situation and that of the country as a whole pans out.

Rics said it expects residential letting to increase again in 2012 as first-time buyers continue to struggle getting their feet on the property ladder and instead turn to renting.

Chief economist Simon Rubinsohn said: "The general economic climate is likely to be the biggest influence on the residential property market next year."

This comes after Rightmove also predicted little change in house prices for 2012, although it forecasted an increase in property prices of two per cent.

It said sellers had cut their asking prices by 2.7 per cent between November and December 2011 and also attributed the slowness in the market to low mortgage availability and people being unwilling to move in the current economic climate.