Out With The Old In With The New
2012 was not a particularly thrilling market. In fact, many areas remained static or fell slightly in value. This did not include the areas in and around London which remained one of the most popular parts of the UK where prices have actually continued to rise primarily because of the demand of overseas investors.
What is the outlook for 2013? Pessimists warn that 2013 could be an unlucky year for sellers with many estate agents expecting a 1 per cent decline before growth returns. Some have predicted up to 4% in the North of England and Scotland.
Recent credit surveys completed by The Bank of England suggest that more money for home loans is becoming available and at more competitive rates. The availability of finance has been an important factor in explaining the static state of the residential property market for the past two years, so it should be easier in 2013 for borrowers to get a mortgage. It is worth noting however that for first-time buyers the lending criteria still remains tough and those potential buyers without financial support from their parents will have to save large amounts for deposits.
An increase in the supply of mortgage credit is necessary but not the only requirement for an uplift in property transactions. The willingness of consumers to take on more debt, the state of their finances, and the level of confidence about the future also matter. Therefore you should expect any rise in property sales and prices gained to be modest because real incomes remain under pressure and households are still working off the debts built up in the previous economic cycle. Public spending cuts in particular this year will hurt the northern regions more than those in the south.
We are in our sixth year of the credit crunch so it is essential to realise that what will happen over the next few months very much depends on the confidence and motivation of both sellers and purchasers. Many transactions will be dominated by those who have to move rather than an impulsive sale.