House prices to keep rising next year

House prices will continue to defy predictions of reverses, rising by 1 to 2 per cent over the course of next year, the Royal Institute of Chartered Surveyors (Rics) forecast yesterday. The body said that despite warnings that the housing market recovery might prove temporary, it believed that continued shortages of supply and rising demand would push prices up.

The prediction is in contrast to warnings from economists such as the former Monetary Policy Committee member Kate Barker, who has said that the recovery might not be sustainable. Organisations such as the National Association of Estate Agents and the Council of Mortgage Lenders have said that a shortage of first-time buyers might act as a natural brake on the market. Stamp duty rises in January may also be a problem, some property professionals fear.

However, Rics expects transaction levels to grow over the course of 2010, from 55,000 a month now to 70,000 a month by the end of the year.