The Inside Edge
Property predictions for 2012 are being highlighted profusely in this week’s media but the main question for existing and prospective property owners alike is, ‘what will happen to house prices next year?’
In the nation’s newspapers, the experts have been having their say and overall it’s a fairly mixed set of predictions. Jon Hall of the Saffron Building Society suggests a combination of outcomes, depending on the type of property involved.
“The lack of confidence in the economy means that house prices are unlikely to do anything spectacular. That said, we are seeing increased signs of activity at the top end of the market,” Hall said.
He went on to confirm the theory that a rise in demand for houses in need of repair is set to take hold.
“We’re also seeing people choosing to invest in refurbishing older properties to achieve greater returns on their capital,” he concluded.
On the whole, mortgage providers are suggesting that 2012 will mirror 2011 in many ways and if mortgages remain hard to secure, the market as a whole is unlikely to change.
I’d expect that next year would look broadly similar to this year,” said David Hollingworth of London and Country Mortgages.” Mortgage availability has played a key role in the reduced level of housing transactions and there is very little expectation that next year’s mortgage market will be any bigger and could even be a little down on this year.”
Elsewhere, there is a suggestion that the entire market is dependent on the Euro crisis and that nothing significant will happen until this is settled. This view is underlined by Ray Boulger of mortgage brokers John Charcol.
“If the euro collapses the consequences on our banking sector will be severe because of the global nature of banking and the huge write-offs, which will be necessary on loans made to Eurozone banks which will become insolvent,” Boulger said.
“The result of this will be that mortgage lenders will have no choice other than to reduce lending which will have a negative impact on the level of activity in the housing market and on property prices.”
While many are predicting no change, others have hinted at a significant drop and in conclusion, Howard Archer of IHS Global Insight added his views.
“I think house prices will fall by 5pc over the first half of the year and then flat line over the second half, “Archer claimed. “I believe there is a significant risk that house prices could fall more than this given the current weakness of the economy and worrying outlook.”
In twelve months’ time we will know if any of these predictions have come true but for now, the Eurozone crisis, availability of mortgages and many other factors look set to subdue next year’s housing market at the very least.