What’s in store for the UK residential property market in 2013?
Many of the predictions made by property analysts have so far been reasonably positive in that the state of the UK property market can’t really get much worse.
2012 was a rollercoaster kind of year with the Queen’s Diamond Jubilee and the Olympic and Paralympic Games having an effect on the market.
But overall UK residential property prices and property sales have been fairly stable, probably ending the year just higher than where they started, although by how much depends on whose figures you look at.
The very latest figures published this week by Rightmove show that residential property asking prices in the UK fell by 3.3% in November, the largest monthly fall ever recorded.
But when taken in the full context of the last 12 months this figure is not really as bad as it may first appear.
The same figures show that the average gap between final property asking price and the sold price narrowed to just 3.7% in 2012 compared to 4.9% in 2011, 2010 and 2009.
Also new seller asking prices are still up by 1.4% in 2012 and Rightmove predicts that the slow recovery will continue through 2013 with a national property price rise of 2%.
But parts of the market are still likely to remain sluggish, however, there is more competition among mainstream mortgage lenders to lend, especially in the first time buyer and buy to let markets, but potential buyers are still struggling to raise a deposit.
One of the key factors in 2012 has been the strength of the London market, where average property asking prices ended the year 6.8% or £29,527 higher, according to Rightmove figures and every major index has shown that in the last 12 months it is London that has outperformed the rest of the national property market.
Rightmove, certainly does not see this continuing. It says that some of the ‘froth’ had started to come off the London market and for 2013 it predicts that the effect of lower price growth in the capital will be compensated for by stronger market conditions and price growth in other southern regions.
On average, the North of England will experience a continuation of the slight improvement reported in the latter months of this year, though overall recovery of the property market will remain much more challenging than in The South.
From a national perspective whilst Rightmove’s 2013 forecast is a little more upbeat on the 1.4% rise in new sellers’ asking prices seen in 2012, the balance of pricing power between London and other regions should see a significant shift.
Some property analysts think that the boom in sales of prime property in London to overseas property investors will continue in 2013 and this will impact nationally on residential property prices.
Surveyors are also upbeat about the coming year. According to the latest report of 2012 from the Royal Institution of Chartered Surveyors (RICS) UK residential property prices will see an increase of 2%.
RICS says that although challenging times are still ahead for the nation’s economy, 2013 may see some slight improvements and this will be reflected in the housing market.
In addition to rising prices, the number of property sales transactions should also see a further increase, moving up just over 3% to 960,000 from 930,000 in 2012.
However, this should be put into context, whilst the figures may suggest an improvement, but residential property sales were much higher before the global economic downturn. For example in 2006 they were over 1.67 Million property transactions.
In London, RICS expects the prime central market to be broadly stable following the tax changes announced earlier in the year but much of the rest of the capital will continue to see above average increases.
Elsewhere in the country it believes that the South East and the North West should also see modest rises.
The rest of the country will either see residential property prices dip slightly or remain flat. A lot will depend on bank opening up mortgage lending.
The government’s flagship Funding for Lending Scheme (FLS) should start to have more of an impact and a desire to hit lending targets in the first half of 2013 there should be more applications being approved and this might also help to boost the new build market as the First buy and NewBuy schemes also have more of an impact.
The one factor that could have a major impact is a rise in interest rates.
Certainly they are likely to remain at their historic low of 0.5% for some months to come. But an unexpected rise could see property prices fall substantially and put a premature end to any recovery in the UK property market.
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