It was always hoped that 2012 with the much hyped London Olympics would be the year that the UK property market regained its former strength in terms of both value and enthusiasm for purchases.
However, national estate agency Strutt & Parker warns that such optimism must be reined in and both buyers and sellers must instead remain realistic about the challenges that lay ahead.
Next year is likely to be a challenging and potentially irrational market. With confidence badly shaken by recent economic news and the ongoing Euro crises there is also pressure on household finances and job security concerns.
The UK property market historically has proved time and time again it has a strong propensity to bounce back and there will always be an underlying demand to trade in property as people outgrow their homes and need to upsize or downsize or move with their jobs, according to Michael Fiddes of Strutt & Parker.
He believes there will be fewer ambivalent sellers and an increase in those that actually have to sell. Fiddes predicts transactions for the majority of Strutt & Parker clients, that is equity rich home owners, will be similar to 2011 but that further price falls are inevitable as the great divide widens.
There will be divides in the market between the north and the south of the country and London moving at a different pace. The London market is likely to be split with international buyers looking likely to dominate.
‘The usual flow of families radiating out to the home counties and beyond from London looks set to stall as depleted confidence gnaws away at those looking to leave the safety of London to start a new life in the country. Meanwhile the country market which has seen price calls of 10% during quarter two and three, anticipates further falls particularly in the North and midlands,’ said Fiddes.
He also believes that buyers and sellers will behave irrationally, sales will fall through and market confidence will be easily spooked by economic uncertainty. Overall transaction levels are expected to be similar to 2011.
Also the trend for renting due to a lack of mortgage funding and job uncertainty will grow.
‘There remains a market for realistically priced houses and especially for farms and land. There are keen buyers out there who will buy when the deal looks right but they are also cautious. There is uncertainty for 2012 on the global plain and those who can afford to buy at the moment are also savvy, they read the economy carefully and share this view of 2012,’ explained Fiddes.