Rightmove reveals its house prices forecast for 2011

Rightmove director Miles Shipside explains: “In 2011 we will see larger falls in weaker markets due to over-supply and forced sales. Conversely, pockets of the country where demand remains credit crunch resistant and supply is traditionally low will see prices underpinned and somewhat immune from the falls in other areas.

“The fact that many would-be buyers do not have the ability to proceed, and some homeowners may find themselves in a position where they are forced to sell, drives house prices down. These negative factors are likely to outweigh the positive price pressures of pent-up demand for housing and a price underpinning shortage of quality homes in popular locations.

“This makes forecasting more of a lottery than usual, though the net result is likely to see average national house prices fall slightly. At best they could be close to flat and at worst down by 5% if repossession numbers jump up from 1 in every 15 sales.”

Other key elements of the Rightmove forecast for 2011 include:

· The number of properties on the market will fall to around 1.2 million - which is down 10% on the figure from 2010.

· The number of transactions will come in at circa 600,000 - which is roughly 50% below historic norms for the second year in a row.

· The number of repossessions is expected to be below 40,000 - which is significantly lower than the previous estimate of 53,000.

Miles Shipside concludes: “In spite of economic woes, unseasonably high numbers of searches on the Rightmove website show that prospective buyers are still looking, perhaps watching and waiting for the right buy to whet their appetite and fit their pocket.

“Sellers are going to have to price more competitively in 2011. It takes time for that message to get through in the absence of another banking crisis, however.

“We cannot see conditions on the immediate horizon that would cause a significant fall in house prices unless the credit crunch tightens. A continuing drift of a few per cent, similar to what we have seen in the latter part of 2010, is likely in 2011 until the economic recovery gathers real pace.

“This would mean that prices could well be around 10% lower than the mid-point of 2010, helping overall buyer affordability and housing market recovery.”