Little prospect of a housing market recovery in 2013

While house prices held up better than we expected towards the end of last year, the market’s underlying fundamentals remain unfavourable. Therefore, we have not made major adjustments to our housing market predictions. Overvaluation and a deteriorating labour market point to further falls in house prices. But with the supply of both new and used housing very suppressed, in the absence of a major shock price falls are likely to be modest.