Prices may decline by another 3 percent next year before starting to recover in 2011, the world’s second-largest publicly traded property broker said in an e-mailed statement today. Chicago-based Jones Lang had previously forecast a drop of up to 15 percent in 2009.

The rate of decline in the three months to April was the lowest in the current real-estate slump, according to Lloyds Banking Group Plc’s Halifax division and Nationwide Building Society, as homes became more affordable and the number of properties for sale dwindled. Loan approvals rose to the highest level in 10 months in March, Bank of England date show.

“Our big concern is that the impact of the recession in many quarters has yet to be felt by the man in the street,” James Thomas, head of Jones Lang’s residential investment team in London, said by telephone. “By the autumn, things could prove to be rather tougher than might originally have been expected.”

The recovery in property prices will start in London, lifted by the 2012 Olympics, the broker said. Prices in the capital will start rising in the second quarter of 2010, three to six months before the rest of the country. Overall, prices will slump 28 percent from their peak in 2007, Jones Lang said.

More loans

U.K. banks granted 27,685 mortgages in April, more than a month earlier, the British Bankers Association said today. That’s a sign the market for home loans is stabilizing.

Jones Lang’s latest forecast implies there will be further “notable” price declines later this year, the broker said. Prices fell 3.8 percent in the first four months of 2009, Halifax estimates.

“It is plausible that the current fillip is only temporary,” Thomas said in the statement. “The key obstacle will be significantly higher unemployment and the implications this has for repossessions and household finances.”

Jones Lang hasn’t changed its 2010 estimate or its forecast that prices will rise by as much as 6 percent in 2011 and by 9 percent in both 2012 and 2013.

“There are a number of reasons to question the sustainability of these latest trends,” Jones Lang said. “These suggest that the current housing-market recovery is sentiment-driven only and is hence both fragile and prone to relapse.”

Prices for the most expensive homes in central London, which fell an estimated 22 percent in the year to March 31, may plunge 18 percent in 2009 as a result of the global financial crisis, Jones Lang said.

Source: Bloomberg