Chesterton Humberts is tipping 2012 as a year of opportunity for well-placed buyers to invest in residential property as it releases its market forecast for 2012, which predicts that prices will remain flat across the UK next year, with growth resuming in 2013.
The uncertainty surrounding the future of the Eurozone, weak GDP growth, high inflation and low levels of lending, compounded by the long-standing affordability issues and weak consumer confidence, mean that house prices outside of London and the southeast are unlikely to move into positive territory next year.
However, with borrowing costs currently at record lows and a rebound in house prices driven by a shortage of stock and pent-up demand expected from 2013, Chesterton Humberts suggests that 2012 could present a good opportunity for cash buyers or those with access to the most competitive mortgage rates.
Nick Barnes, head of Chesterton Humberts new research department explains, “There has never before been a set of circumstances similar to those we are experiencing now: interest rates are at a historic low; house prices are on average around 11.5% lower than their November 2007 across the country; supplies of new homes are way behind government targets; there is pent-up demand from frustrated buyers due to lack of lending; and confidence in other asset classes such as bonds and equities is rock bottom, driving more and more investors to safer assets such as property and gold.”
Nick concludes, “There is clear downside risk from the prevailing economic environment, however, these market conditions will not last forever and while they do, this really does represent a very interesting opportunity for those willing to put their faith in property.”
Chesterton Humberts is projecting average national price growth of 1.8% per annum over the five years to 2015 but points out that 2011 and 2012 are the weakest years, with -3.2% and 0% growth respectively, which drag down the five-year forecast. When the timeframe is narrowed to 2013-15, the anticipated average annual price growth is a healthy 4.1% (see table below).
The divide between the south and the rest of England looks set to remain both with regard to economic and property market performance. The top performers among the regional housing markets will be London, the South East which will continue to benefit from its London connections in terms of employment and migration, the South West, the East Midlands and the East. All five markets will match or exceed the national average price growth over the forecast period.
At the other end of the scale, the North East region is forecast to record the slowest regional rate of price growth, averaging less than 1% per annum between 2011-15, although as at the national level, this figure jumps to 3.8% when considering a 2013-15 timeframe.