Market Update - New Year

Posted on: 21 December 2012

We enter 2013 with cautious optimism for the property market which, contrary to many predictions, held up strongly during 2012 despite challenging economic conditions, and particularly the effects of issues in the Eurozone.

Towards the end of 2012 the UK officially came out of recession and unemployment numbers, despite still being high, have been falling for some time with the number of jobs in the private sector at record levels.

In the property market, it is largely confidence that drives demand, coupled with an ability to transact through the availability of finance.

The Council for Mortgage Lenders (CML) believes 2012 will have ended on circa 930,000 transactions compared to the 825,000 they had previously predicted, with £9 billion of net lending rather than the £8 billion predicted

In 2013 the CML's central forecast is for 950,000 property transactions, £156 billion of gross lending and £12 billion of net lending.

The CML has also stated that mortgage arrears have been lower than originally forecast for 2012, and the number of repossessions for 2012 will be circa 35,000, some 10,000 lower than forecast. The CML's central forecast is for 35,000 repossessions in 2013.

No one is pretending that there is going to be a huge increase in sale transactions in 2013 or that borrowing mortgage finance is going to get significantly easier but these figures do show that the market is active and improving.

Over the last four years many first time buyers have found it difficult to buy due to tighter lending criteria. Many of these potential buyers have now been able to save larger deposits and are returning to the market. A recent survey from Rightmove showed around 25% of potential first time buyers expecting to buy in the next 12 months.

The lettings market has been buoyant and activity strong. Some of this has been caused by the inability of some to buy or sell but there is also an underlying requirement for more homes. 2012 will have seen less than 100,000 new homes constructed and this shortage of supply has helped ensure that prices have held up and that demand in the rental sector has grown.

I expect the market in 2013 to continue to demonstrate the slow improvements of 2012 with a balanced market between sales and lettings. Private lettings now account for some 16% of households and the flexibility of tenancies is becoming an attraction to many. For landlords, yields are good and attractive compared with other investments.

I also expect the economy to start to grow and this will, increase confidence and likely investment by both Government and the private sector.

Undoubtedly, we remain in fairly austere times but with interest rates at record low levels, now is undoubtedly a good time to move if one is able.

The team at Sansome & George and myself look forward to continuing to provide the best advice and service to our customers and clients and look forward to speaking with you in 2013.

David Sansome
Managing Director

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