Prime Central London will remain buoyant due to lack of supply. Overseas buyers who are driving this market will not be any less keen in 2012, the European crisis will have no effect. However this market bears no relation to the rest of the Uk there is no ripple effect that is tangible, it is it’s own micro economy.
I predict a 5% rise in 2012 as supply will remain low.
The UK market as a whole will be a case of increasing North South divide, with the further you travel from London the worse the price falls and difficulty in selling will be.
However I do not see the UK market ‘crashing’ even though logically it should. Low interest rates mean relatively few repossessions and distressed sales (although more than 2011), as existing mortgages remain very affordable. Supply will remain low and with renting becoming outrageously expensive people will still want to buy, if they can get finance. Supply and demand will thus create an artificially stable market. Of course when interest rates rise this will all change but that is not likely to be until 2013. I suspect that prices will drop overall about 5% in the South East. However this this average is made up of desirable properties not dropping at all and compromised properties dropping significantly, as buyers will be extremely cautious and discerning.
The UK as a whole will consist of hotspots and areas severely hit by economic woes. I believe that UK house prices as a whole will fall 6% in 2012 . Average house prices of course should be taken with a pinch of salt, there is no such animal. As a visual roadmap, I see price falls rippling out from London suburbs in concentric circles, getting worse as they spread. There will be hots spots of stable economy towns and these along with very desirable properties will be somewhat protected.
Along with PCL the only other positive area of the market will be the continued rise in rents, the continued difficulty in getting mortgages will mean even more people will be forced renters and not just potential first time buyers. I predict rents will rise another 5% minimum in 2012 simply due to supply and great demand. However a caveat to Landlords: rents are becoming unaffordable and a large swathe of tenants are paying their rents on credit cards and worse. Non payment will become far more common due to pure unaffordability.
A fair, reliable income is far more profitable than the cost of evictions for non payment. As for the moral argument… Another time.