In its latest UK Residential Market Forecast, out last week, the property services firm says this is because the upturn is sentiment-driven, fuelled by the sharp fall in interest rates, which improved affordability for many home movers.
But it claims that the full impact of rising unemployment has not yet been factored in to the market, which it believes will impinge upon the positive price growth.
The firm believes that UK property prices will fall by up to 14% further by the end of the year, with prices in prime central London expected to fall by up to 18%, which is a slight improvement on its previous forecast. Greater London is the only area where the firm is not reducing its 2009 forecast, with prices expected to fall by up to 17%.
On a regional basis, price falls are not expected to be so severe, with those in the south, the midlands and the north expected to fall by up to 13% further by the end of the year.
The firm believes that the fall in prices across the UK - expected to be 28% below their 2007 peak by next year - will encourage new demand, particularly from first-time buyers.
It expects the market to bottom out by Q2 2010, with prices starting to recover in Greater London and prime central London by Q3. Prices in central London are expected to increase by up to 2% next year, with Greater London prices expected to remain stable. The firm believes that prices could rise by up to 7% per annum between 2011 and 2013 due to the supply shortage.
Jones Lang LeSalle's sentiments are echoed by Halifax, which warns that the 2.6% increase in house prices in May should be viewed with caution. Prices increased 2.6% on a monthly basis to £158,565 in May, the first rise in four months, according to Halifax’s latest House Price Index, out yesterday. However, they were down 16.3% on an annual basis.
Nitesh Patel, Halifax’s housing economist, says: “It is always important not to put too much weight on any one month's figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn."Patel adds that there are some tentative indications of a possible stabilisation in activity, albeit at a low level.
He says: "Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase increased by 19% between the final quarter of 2008 and the first quarter of 2009, on a seasonally adjusted basis.
Approvals in the three months to March were 45% lower than in the same period in 2008. “House sales remain substantially below their low term average and market conditions are expected to remain difficult with housing activity continuing at low levels over the coming months."
The index comes as the Bank of England announces that the Bank Base Rate remains on hold at its lowest level of 0.5%.
