The local and regional residential market in 2012 was static in terms of prices – the Land Registry report that nationally prices were up by 1% in the year to November 2012.  Supply of property has been generally quite good and matched demand. House purchase activity was robust even at the end of 2012 even though the economy barely grew over the year. This has been an improvement over all price ranges although there was proportionately more activity in the higher price ranges.  We have seen some first time buyers returning to the market however and even some sales on a buy to let basis.
 
Most forecasters suggest there are there are grounds for optimism that the market recovery which began in 2012 should continue in 2013, reinforced in part by Funding for Lending scheme effects.  This reduces the funding pressures on Lenders hopefully enabling them to be more flexible on lending.  The global economy remains challenging however but the risks associated with the Eurozone crisis appear less critical than at the start of 2012 thanks to the actions of the European Central Bank and European policy-makers more generally.

Property listing website Rightmove report signs of ‘green shoots’ as property coming to market up 22% year-on-year and Rightmove traffic up by 27% over the first two weeks of January as well.  This together with increased confidence among sellers to come to market – seven out of 10 are reported as ‘discretionary movers’ outnumbering forced sale drivers such as the ‘three Ds’ of death, debt and divorce.  They perceive an improving market sentiment underpinned by growing confidence among property investors as 74% of professional landlords expect to add to their portfolios in the next 12 months.

For ourselves 2012 was exceptionally busy.  We welcomed many new clients as well as new surveyors and staff.  Part of December was spent canvassing opinion from local agents.  Most of this agreed with our own opinions that 2013 is unlikely to see measurable increases in value but stability can be seen as a good market trend.  All agents report increasing levels of market interest with buyers and sellers both coming to the market in greater numbers.
 
The RICS suggest a 2% increase in prices for 2013.  Halifax comment “We expect continuing broad stability in house prices nationally in 2013 with prices likely to end the year at levels close to where they begin”. Nationwide do not commit themselves to a figure but also suggest the market will remain largely unchanged.
 
We don’t disagree.
 
RICS comment: http://www.rics.org/uk/knowledge/news-insight/press-releases/house-prices-to-rise-two-percent-in-2013/

Land Registry comment: http://www.landregistry.gov.uk/public/house-prices-and-sales

LBG/ Halifax comment: http://www.lloydsbankinggroup.com/media1/press_releases/2013_press_releases/halifax/0701_HPI.asp

Rightmove: http://www.rightmove.co.uk/news/house-price-index

CML comment: http://www.cml.org.uk/cml/media/press/3394

The local residential property market

20 mile radius of Milton Keynes

* Prices rose in the first half of the year by between 5% and 7% due to low supply and high demand

* Increased supply resulted in house prices being largely unchanged over the whole of 2010

* The election, changes in taxation, concern over the economy and most recently snow have all slowed the market over the year but numerous positive signs including good growth have helped the market

* Agents and vendors have been very inventive in devising chain breaking techniques

* There has been a substantial decline in overall market activity in the last 24 months to about half peak 2007 levels

* Nationally repossessions were around 36,000 in 2010 and are predicted to be slightly lower (RICS) at around 33,000 in 2011

* Mortgage lending has been at its lowest since 2000 and is expected to remain at these levels for 2011 according to the Council for Mortgage Lenders

* Predictions for 2011 are for very modest falls in value. The RICS are suggesting around 2% over the year and Nationwide see “..little evidence to suggest house price declines are likely to accelerate”

* Long term predictions suggest a 12% increase in values over a 5 year period but an increase in the “north/south” divide with prime London prices leading the market by a considerable level

Select here to view the full report (pdf 216Kb) >>>

Prices have stabilized in the last 3 months.  Good properties are continuing to come to the market and are selling well.  There is however generally seen to be an oversupply of some house types and this is tending to result in some houses selling at less than asking prices.  Inflation continues to be a concern for the overall economy although the pressure on interest rates seems to be reducing.  Mortgage funds are available and an increasing number of borrowers are moving to variable rate terms.

Mortgage arrears figures are improving and a reducing number of properties have been repossessed.  This reduction in distress sales is seen as helpful for the whole property market. It is probably unlikely that there will be any further improvement in the market this year.  Commentators are becoming more confident however that we are not heading into a further fall in prices and that the recent reported declines (0.9% fall in August – Nationwide) are likely to remain modest.

Everyone who was waiting for the election result before they went out to buy a house is now in the market.  Agents report many more properties coming to the market (and now not needing a HIP) in all price ranges, resulting in viewings and sales for property which is correctly priced.  As the supply of property has increased prices have stabilised but good houses are making good prices.  The new Goverment's clear need to raise revenue and reduce costs will result in a difficult market but positive action within the economy could increase stability.

The residential property market has recovered from its slow start to the year:  snow and cold have always put purchasers off!  Nationwide and Halifax both reported small falls in prices for February and the market was very slow.  Most agents are now reporting more buyers than sellers with prices creeping up as a result.  Tying up the chain and getting the sale to completion can still be difficult however as finance is still restricted.  Uncertainties in the news including possible pressure on interest rates and the potential for a change in government are also complications for buyers and sellers.