UK house prices will increase by 2% over 2013, while rents will rise at double this rate as the squeeze on the sector continues, surveyors have forecast, reports the Evening Standard.
RICS said that factors such as a multibillion-pound Government scheme to boost lending will result in some improvements showing through in the housing market next year, as the wider economy remains tough and uncertain.
This is likely to result in a 3% year-on-year increase in sales, with 960,000 transactions forecast to take place next year, which would be the highest number since 2007.
The pick-up in sales activity is forecast to be particularly noticeable in London, the South East, Wales and the North West.
However, the improvement will still be modest by historic standards as total sales in 2007 amounted to 1.62M, and first-time buyers will still struggle to make the jump onto the property ladder.
RICS said that in London, the prime central market is likely to be "broadly stable" in 2013 following tax changes introduced in the spring, as much of the rest of the capital continues to see above-average price increases.
House price growth in London has consistently out-performed the rest of the country, amid strong interest from overseas buyers, but a new 7% stamp duty rate placed on homes worth over £2M in March was criticised by estate agents, who said it would cause housing chains to collapse.
The South East and the North West are set to see a modest pick up in prices but the rest of the country will either see prices dip slightly or remain flat, RICS said.
Meanwhile, the pressure on the rental sector is set to continue as the growth in new rental homes becoming available has been outpaced by rising demand from would-be tenants in every quarter since spring 2009, RICS said.
Around six-out-of-10 people living in the private rental sector are thought to be would-be buyers who are trapped in renting, either because they cannot raise the typical 20% deposit they need to put down or meet lenders' toughened borrowing criteria.
RICS said that surveyors across the country are predicting that rents will rise by 4%.
This prediction is higher than a recent survey of landlords by property search website Rightmove, which found that rents are set to rise by around 2% next year on average as they reach the limits of affordability for tenants.
The RICS report said: "Inevitably there is some variation at a regional level but in no case are rents expected to be lower at the end of 2013 than where they currently stand."
Predictions for improvements in the housing market chime with those given by the Council of Mortgage Lenders (CML) this week.
The CML said the market should feel more "stable and positive" in 2013, with modest year-on-year growth in lending to home-buyers.
The number of mortgages on the market has increased by around a fifth since the Government's funding for lending scheme was launched at the start of August, although much of the strongest competition among lenders so far has been aimed at people with bigger deposits.
Simon Rubinsohn, RICS chief economist, said: "The amount of sales going through should see an increase across the country, climbing to its best level since 2007, as the funding for lending scheme helps boost the availability of mortgage finance.
"But these tentative signs of recovery in the sales market should not blind us to the very real problems that still exist.
"Even with the funding for lending scheme and some other government policies beginning to be felt in the mortgage market, many first-time buyers will continue to find it difficult to secure a sufficiently large loan to take an initial step on the housing market."
Despite the continued tough state of the economy, RICS predicts that repossessions will dip below 35,000 this year for the first time since 2007.
Figures for the first three quarters of this year show there have been 26,300 repossessions so far, showing an 8% drop on the same period a year ago.
Lenders have put the decline down to good communication and arrears management by borrowers and lenders.
RICS said further improvements to the repossession figures are likely in 2013, amid a steady employment rate and a more helpful lending environment.