The initial weeks of 2012 brought widely conflicting reports about the prospects for the property market in the year ahead. Living in such unprecedented political and economic times undoubtedly means that providing an accurate forecast is more challenging this year than it has been for many years; however Garrington believes that certain key trends have already started to emerge in January that will continue to shape the market this year. These are further explored below.
Despite the wider economic volatility, the property market managed to weather the storm last year with national prices across many regions not falling as predicted, and in some cases they even showed modest growth in the country and double digit growth in parts of London.
The last quarter’s market activity led to average house prices in the UK rising by a modest 0.3%. According to Nationwide the annual rate of change increased from -0.5% to 1.1%. London saw the strongest quarterly growth rate, with prices up 2.6% quarter-on-quarter and the Capital maintained its status as the best performing region over the past year.
Garrington enjoyed record levels of new clients retaining the firm for assistance with their property search during the final quarter of 2011, thus bucking the seasonal trend of waiting for the Spring market. This brisk activity has carried through into January and is being driven by both latent demand from last year and a realisation amongst buyers that stock levels are low, and additional time is needed to secure the right property.
Early signs in the market in January seem to suggest strong levels of intent, although the ensuing weeks will determine if this translates into transactional activity.
The Olympic Effect
Throughout January Garrington has experienced strong demand from international private clients and corporations wishing to secure the best accommodation for the duration of the Olympics. Whilst this time horizon might seem excessive by normal rental standards, the competition for high quality and unique accommodation is already intense.
Garrington has also experienced particular interest from Asian investors wishing to evaluate investment opportunities in East London in light of the Olympic legacy, and onward drivers for growth in the area such as the ‘Tech City’ regeneration zone.
Thanks to continued low interest rates, the number of forced sales remained low in 2011 and interest rates are expected to stay low this year; a view supported by the falling rate of inflation, the high market liquidity, a reduction in the demand for loans and increasing competition amongst lenders.
The lack of forced sales in the market, together with affordable credit is affecting sale decisions amongst home owners and investors alike. Latest research from the RICS reveals that only 3% of landlords are considering selling a property at the end of a tenancy in contrast to 10% in late 2008. The severe constraint on stock levels served to underpin property values last year, and we expect this trend to remain throughout 2012.
A lack of competition amongst sellers for the best homes in desirable locations has triggered an upswing in confidence in vendor’s asking prices in January, with Rightmove reporting a 4.2% increase for the month; no doubt fueled to a large extent by selling agents competing for stock. In such a market it may be that there has never been a more pressing need to have a buying agent to help balance the equation. Pin-point expertise and established relationships within individual markets may well prove to be the key ingredients to successful prime property acquisition in 2012.
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