Risks to flat 08 UK house price forecast

LONDON (Reuters) - Britain's fragile housing market is underpinned by a resilient economy but credit market woes could still lead to a deeper downturn, Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors (RICS), said.

Rubinsohn told the Reuters Housing Summit on Tuesday the influential industry body was sticking with its zero percent house price forecast for 2008 but that he was mindful of growing risks in light of recent falls in new buyer enquiries.

"They (our models) are suggesting that the risks are on the downside of zero," he told the summit in London.

However, he added that the probability of a 1990s-style UK housing crash was still about 1-in-10, in line with a previous forecast made in September.

"The odds (since then) certainly have not increased partly because the economy does seem to be displaying real resilience in the face of headwinds," he said.

More than eight months after the U.S subprime crisis triggered a global debt crunch, Rubinsohn said the reduced availability of credit was still the number one risk factor facing Britain's housing market.

But he said the UK economy was still resilient and further interest rate cuts would help shore up Britain's commercial and residential property markets "by the close of the year."

House prices in England and Wales fell at their fastest pace in the three months to January in at least a decade, while new buyer enquiries fell and the stock of unsold property on surveyors' books rose, a RICS survey showed last week.

Rubinsohn said the weaker climate would discourage housebuilders and keep a lid on housing starts, undermining government targets to deliver 3 million new homes by 2020. He said housing starts in 2008 would be "at best flat" compared with 2007 and down on 2006.

(www.reutersrealestate.com for the global service for real estate professionals from Reuters). (Reporting by William Kemble-Diaz and Sinead Cruise; Editing by Rory Channing)