A pick-up in prices has altered the outlook for housing but it is too early to suggest the market is in full scale recovery, according to Ian Thomlinson of Jones Lang LaSalle.
Thomlinson, head of JLL's residential development and investment team in Manchester, said: "The economic fundamentals that have supported the upturn, most notably the constrained supply of housing for sale, may be eroded as unemployment hits a peak and mortgage lending remains weak."
Jones Lang LaSalle's latest UK residential research said markets picked-up during Quarter 2 with London and Southern areas rising furthest, followed by the North and Midlands.
Thomlinson continued: "In the year to Q1 2009 northern and midland regions experienced average house price declines of 16% compared to circa 18% further south. During Q2 2009, we saw price rises on average 2.8%, compared to 5.7% in London and 4.1% in the south."
Thomlinson concluded: "While the recent drive in the market is encouraging, it is impossible to ignore the short-term risks posed to the UK residential sector by rising unemployment and poor credit availability. However, sentiment continues to improve in the development sector, with many mainstream house builders in the region making tentative steps to return to the land buying market in light of price corrections and the improved outlook in the medium term.
"In the short term, we are forecasting a slightly shallower downturn next year and a delayed and slower increase in Northern and Midland locations come 2012. Longer-term opportunities will be presented by the shortage of housing required to accommodate the predicted 9 million increase in the UK population over the next 25 years. We expect prices to rise on average by 6% per annum as a result of this."