PREDICTIONS 2012
Kevin Hollinrake, MD, Hunters
People talk about the property recession but it’s not the full story. Although volumes are low, they are consistent. Pre-
2008, there were around 1.2m transactions annually in the UK; now it is more like 550,000-600,000 per year. While there is a muted lending position and an obvious lack of confidence from the house-buying public, we’re likely to see property transactions continue at the same levels. I think prices and volumes will remain pretty flat next year. I advise those who are selling to not wait
for prices to increase, it is likely to be two to three years, at the earliest, before we see prices starting to rise again. We’re focusing on increasing our market share and on further expansion. We’re excited by our acquisition of Bairstow Eves and delighted with how things are going so far.
Lee Watts, MD, Kinleigh Folkard & Hayward
I anticipate 2012 to deliver a similar total of property transactions to 2011. I believe the first half of 2011
will be considerably stronger than the second with early price gains eroded as the year goes on. We will see further demand in the sales
market with an increased supply of stock for lettings due to high rental yields and increasing levels of buy-to-let funding made available by lenders. This will lead to growth and activity within the new homes market with developers confident in developing the land banks they have been building up over the past few years. The lettings market will experience a
healthy volume of business throughout 2012 with an increase in longer term renting due to property values and mortgage availability making home ownership difficult for first time buyers.
Ian Wilson, MD, Martin & Co. Consolidation in the property portal market will create players with a market share to rival Rightmove. This will keep price rises in check at RightMove but it will mean higher overall spend on web-advertising by letting businesses to cover all bases. Credit referencing costs will fall as low cost providers “commoditise” this service. The number of estate agents will decline as the housing transactions remain static, new and re-mortgage rates will move up as LIBOR disconnects from
bank base and house prices outside of prime central London will fall by another 20 per cent over the next three years. The number of owner-occupiers who rent out their home will rise, and the percentage of UK households who rent privately will also rise. Letting agency acquisitions will accelerate as large businesses with access to cash build market share. The importance of strong online branding in the property sector will be driven home, but we will see a rise in consumer complaints through social media and managing your reputation online will become a key skill.
Lucy Morton, Senior Partner and Head of Lettings, W A Ellis
I believe that the lettings market in Prime Central London will suffer more from the
eurozone crisis than the sales market which is underpinned by international buyers flooding in as they see London as a safe haven for their money. I do not envisage huge price increases in 2012 and unless there is a major exodus from the expat community in the City due to the financial crisis, I believe that rents will continue to plateau, particularly at the top end of the market.
David
Newnes, Director, LSL Property Services
Rents will rise further through 2012. The main driver is an excess of demand for
Simon Godson, Partner, Residential Sales, W A Ellis We believe that buyers will continue to experience a lack of good quality choice and sellers’ expectations will need to be managed. We have seen an increase of around 7 per cent in asking prices compared with a year ago, but this is where we have to be realistic as there is still a gap that needs bridging between asking prices and eventual selling prices.
The number of estate agents will decline as housing transactions remain static.’ Ian Wilson, MD,Martin & Co.
private rental sector properties as those who in previous years might have been able to become first-time buyers are prevented from purchasing by tight mortgage lending criteria and the burden of saving while paying unprecedentedly high rents. Lenders in the latter part of 2011 have shown a willingness to reduce rates to try to make finance more affordable, but the developing eurozone crisis and uncertain growth prospects in the UK mean the size of required deposits is unlikely to shrink any time soon. “Nonetheless, this year lending to
landlords has risen by 46 per cent, reflecting the improving prospects of investing in rental property. This is great news for tenants as an increase in the supply of rental accommodation will ease the pressure on the existing stock and will gradually stabilise prices. This won’t happen overnight, but as lending to first- timers remains stalled, Buy-to-Let investment will slowly start to chip away at rental inflation. Currently, only 16 per cent of the UK housing stock is in the private rental sector, compared to around 60 per cent in Germany. In the coming years, the UK’s property market is likely to align itself more closely with the continental model, with fewer people owner-occupying and more remaining long-term in the private rental sector.
PROPERTYdrum JANUARY 2012 11
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