So 2011 is drawing to a close and it seems an appropriate time to take a brief look back at 2011 and look forward to 2012.

It seems a long time ago but we entered the year with a fair amount of concern over the state of the economy and the “austerity measures” that the coalition Government was proposing. VAT was increased to 20% and the general feeling was less than positive.

In terms of house sales the year got off to a better than anticipated start due, in part to a small increase in buyer activity at the upper end of the market fuelled by City bonuses and a desire to buy before stamp duty was increased to 5% on purchases above £1million from April.

With mortgage lending at low levels and lending criteria tight the lettings market continued to grow. Demand outstripped supply, often from tenants who, given a different lending environment, would have purchased but who now found themselves seeking accommodation as “reluctant tenants” often renting from “reluctant landlords” who were unable to buy and sell themselves and so entered the private rental sector.

The lettings market has remained strong throughout 2011 with rental growth caused by supply and demand factors and many professional landlords taking advantage of improving yields and low interest rates to add to their property portfolios. Across the UK we have seen the number of households in the private rental sector increase to nearly 17% of the entire market and this still looks likely to grow further in 2012.

The growth in property in the private rental sector has been at the “expense” of property in the owner occupied sector where the percentage of households now owned and occupied has fallen to around 67%, down from a peak of around 73% a few years ago. Volumes of house sales nationally have fallen to below 600,000 in 2011, a massive drop from the 1.2 million level seen in 2006.

In North Hants and West Berks, whilst not “ring fenced” from the rest of the UK economy, we have been fortunate to have seen a steady, if unspectacular, market throughout 2011 as the benefits of our location and amenities have continued to see a reasonable balance between supply and demand. This has meant that we have not seen the reductions in prices evident elsewhere in the country.

At Sansome & George we have traded for many years and in many different market conditions. I feel certain that this experience has better enabled us to advise our clients and maximise results for our clients accordingly.

As we move towards the New Year the effects of the Eurozone crisis and ever tightening public spending are showing some signs of affecting confidence with many people postponing their moving plans and concentrating on keeping their finances under tight control. The market remains OK for those with the motivation to move and I expect this to continue throughout 2012.

2012 is likely to see property values remain fairly flat but, alongside continuing low interest rates, property is likely to become more “affordable” for those in employment. The Government has recently announced measures to try and boost the house-building industry and enable first time buyers to gain a foothold in the market.

Various surveys have pointed to a significant “pent up demand” in the housing market. We have a growing and aging population and need to increase the supply side of the equation. Clearly we will need to see improved consumer confidence and ability to borrow before that demand can be fully realised through an increased volume of sales.

I do not see volumes falling lower than at present and I believe that those who do take the decision to move may well look back in future years and smile in the knowledge that now was a good time to do so. The long term prognosis for values being upwards based on ever increasing demand for somewhere to live.

I expect the lettings market to remain strong in 2012 and with many tenants staying in their properties for second, third and fourth years, I expect there to be a shortage of fresh property available to rent. This will inevitably put upward pressure on rents although I feel this will be tempered by an ability to pay. Landlords will also recognise the value of “a bird in the hand verses two in the bush” when it comes to risking void periods, which are the destroyer of value on such an investment.

At Sansome & George we have plans to expand our operation and are preparing to “hit the ground running” in 2012 and look forward to helping our many sellers, buyers, landlords and tenants achieve their moving goals. 

David Sansome
Managing Director