There is uncertainty over the likely state of the British housing market in 2010 with experts on Monday making contrary predictions.

Hometrack, which collates and interprets data for the housing and residential industries, has issued a gloomy prediction -- house prices will fall in 2010 by 1 percent.

Hometrack says pressures on household incomes, rising unemployment and a bumpy economic recovery are all likely to offset the inflationary pressure on prices created by a shortage of sellers.

Hometrack's director of research Richard Donnell told the Guardian newspaper: "While economic growth is expected to pick up in 2010, rising unemployment and slow growth in household incomes is set to act as a drag on demand."

"The new year will also see a growing focus on the election and further speculation over possible changes to fiscal policies and government spending," said Donnell. "On the basis of the economic outlook and market evidence we believe it is unlikely that the improved market conditions of 2009 will be replicated in the New Year."

Hometrack's figures showed growth at the end of 2009 in house prices, by 0.2 percent in November and 0.1 percent in December, leading to an annual decline over 2009 of -1.9 percent.

This is a marked slowdown in the rate of decline, which was -2.9 percent in November. From the peak of the market at the end of 2007, house prices have declined by 15 percent, with the trough of the decline at 22 percent.

The Center for Economic and Business Research (CEBR) also issued its house price predictions for 2010 on Monday, but was more optimistic.

The CEBR, a think-tank based in London, predicted house prices would rise in 2010 by 2-4 percent.

Ben Read, a managing economist at the CEBR, said: "House price growth will moderate in 2010, with price at the end of the year between 2 and 4 percent higher than today. Over the longer term the weak recovery will continue to hold growth back, but we still expect house prices to be around 15 percent higher at the end of 2012 than they are today."

Read said lack of supply was one of the drivers for higher prices. He said government statistics showed housing completions fell by 18 percent in 2008, and are likely to fall a further 19 percent in 2009 to just 115,000 completions. This compares with government targets of 240,000 housing completions per year to keep pace with demand, a target that has not been hit in 20 years.

As long as housebuilding does not keep up with demand, prices will rise, said Read. The dramatic collapse in housebuilding in the last two years as a result of the financial crisis and the recession that came in its wake will feed through into prices over the next five years, he added.

Read forecast mortgage lending to continue to improve slowly as banks continue to rebuild their balance sheets. In addition, he expected the price of mortgages to remain relatively low as the Bank of England Monetary Policy Committee (MPC), which sets the bank rate, continues to keep interest rates at the historical low of 0.5 percent.

A danger to this scenario is the exceptionally high rate of public sector borrowing (PSBR), which stands at 178 billion pounds(about US$281.8 billion) for 2009 and 176 billion pounds for 2010, according to chancellor of the exchequer Alistair Darling's forecast in his Pre-Budget Report (PBR) on December 9.

Read warned that house prices could go down if the large PSBR hit international confidence in Britain's financial reputation and triggered a sterling crisis which would force the MPC to increase interest rates.

Britain remains the only G20 nation still in recession, although the government has forecast growth of 0.2 percent for 2009 quarter 4, and growth in 2010 of 1-1.5 percent.

Darling's PBR forecast that the annual rate of decline in the economy over 2009 would be 4.75 percent. Britain has now been in recession for six quarters in a row, the longest recession since figures began in 1955.

There is a general election due in 2010, no later than May, which the governing Labor Party looks set to lose to the leading opposition party, the Conservatives. The lack of firm fiscal policies from either party for dealing with the high PSBR has drawn critical comment from the global financial community.

(Xinhua News Agency December 29, 2009)