Market Analysis Spring 2011


Conclusions and Outlook


With all the figures now in for 2010 we can assess what sort of a year it was for the property market and what the prospects are for the performance of property in 2011. Last year was broadly in line with expectations but was very much a year of two halves. The opening six months was an extremely busy period as many vendors and buyers who had delayed their property transactions in 2009 entered the market with the feeling they’d held out long enough.


After the initial surge in the sales market, activity tailed off over the second half of the year as the coalition government bedded in and austerity plans were put in place.


In London, the prime property market held up well throughout the year, however the market for flats and less prime areas saw price slippage of some 10%. Family houses maintained their value as sustained demand driven by low interest rates and lower than expected unemployment led to a lack of forced sellers coming to the market and a shortage of supply.


For the three months to February 2011 the market was dominated by the bad weather from November and December. The traditional Christmas slow- down was exacerbated by the snowy conditions which put off many house hunters until the New Year. This pent up activity has certainly been visible in


14 Market Analysis Spring 2011


the opening two months of 2011. Many Winkworth offices have enjoyed a large rise in the number of potential buyers registering interest and there has been a marked improvement in the number of properties coming onto the market. However, overall numbers of properties available for sale are still low and this will have an effect on prices if the current supply and demand imbalance is maintained. The good news for sellers is that this effect will be rising prices as buyers fight to outbid one another, but pricing must be sensible. While correctly priced properties are flying off the proverbial shelves, anything over-priced is languishing in the market doldrums and is either being pulled from the market completely or is subject to heavy price revisions.


In the rental market, demand shows no sign of slowing down. The amount of rental property available was given a boost at the start of the year by landlords who wanted to take advantage of rising rents and bolster their portfolios. Demand for rental property is so huge, however, and finance for first- time buyers is showing so little sign of improving that this increase in supply is unlikely to make much of a dent in the rise of average rents.


There is little on the economic calendar to suggest there will be any major upheavals in the property market in 2011. Unemployment levels and the cuts to public sector will have some impact on the overall market later in the year but it is unlikely to affect the prime areas of the sector. A key factor


for the market will be when and by how much interest rates are raised in order to control inflation. It is likely that this will be after the property market’s busy spring period but should it take place over the summer we could experience a more exaggerated summer slowdown as mortgages become more expensive.


Overall, we anticipate the UK property market will be broadly flat in 2011. Lack of mortgage finance continues to constrain the level of activity in certain parts of the market, first-time buyers will continue to struggle to get a foothold on the ladder and movers without large amounts of equity or savings to use as a deposit will also find it difficult to secure a mortgage this year.


However, as demand will continue to outstrip supply so heavily, prices will grow in some of the prime markets and large family homes. The amount of activity we have witnessed already in 2011 is very encouraging and the rise in the number of sales agreed will provide encouragement to other would-be vendors that – as long as their property is conservatively priced –is likely to generate offers matching and in some cases in excess of the asking price.


The amount of activity we have witnessed already in 2011 is very encouraging.


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