Hometack expects the housing market in England and Wales to feel the effects of rising unemployment in the months ahead.
The housing intelligence firm is predicting a 1% fall in the average cost of a home in 2010, despite a rise of 0.1% in December, which followed on from a 0.2% increase in November.
However, December also saw the number of potential buyers entering the market fall by 2.2%, the first decline since January 2009.
This month’s increase eased the annual rate of decline to 1.9%, but Hometrack’s director of research, Richard Donnell, is convinced that rising unemployment and slow growth in household incomes will take their toll next year.
He concedes that a shortage of homes for sale will help to underpin prices but expects demand to be the deciding factor in whether they rise or fall.
Meanwhile, the Royal Institution of Chartered Surveyors (RICS) is taking a more optimistic view and predicting a 1% to 2% rise in UK house prices in 2010, despite a “flat” employment market and continued caution among lenders.
According to the RICS, supply should continue to increase in the early part of next year but will struggle to keep pace with demand.
The body also estimates that transactions will rise from between 55,000 and 60,000 per month in 2009, to 70,000 by the end of 2010.
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