The RICS(Royal Instituite of Chartered Surveyors) announced they expected house prices to increase by 1.5% over the next year. Over the next few years they expect prices to increase by 4% per year on average.
Are they right?
In December 2007 they were predicting that prices would be flat in 2008. Prices actually fell by about 20%. Since then there forecast have been better, but this is because prices have not changed much. In reality it seems no-one is able to forecast future house price movements.
A common source cited as forecasting the House Price Crash was Capital Economics who did forecast a fall of over 20%. Unfortunately they seem to forecast this ever single year. This seem to start back in 2002. From 2002 house prices rose by 40% before they crashed back down, and took a further five years. Anyone who had stood on the sidelines waiting to buy because of Capital Economics forecast would have sat outside the housing market waiting for the crash and even if they had purchased in 2008/2009 would have still most likely have paid more than in 2003. For Capital Economics they have secured a role as a source of forecast to contrast with the typically rosier forecasts offered elsewhere. Good marketing if not good forecasting.
So going back to the question are they right the answer is that they might be.
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