UK property market likely to see slow recovery in 2013
Average asking prices for homes in the UK have fallen in the last month but there are overall signs of improvements in the residential property market, it is claimed. New sellers have chopped an average of £7,772 or 3.3% off asking prices, according to the latest figures from national property agents Rightmove, the largest monthly decrease ever reported by the business. However the company believes this follows an established pattern of December drops over the previous eight years and that despite this new seller asking prices are still up by 1.4% in 2012.
It also points out that the average gap between final asking price and the sold price has narrowed to 3.7% in 2012 compared to 4.9% in 2011, 2010 and 2009 and it predicts that the slow recovery will continue through 2013 with a national rise 2%. Looking ahead to 2013 it predicts a slowing in the London property market even though over the last 12 months London has seen strong price growth. Average asking prices ended the year 6.8% or £29,527 higher but Rightmove predicts that the growth in new seller asking prices will slow to around 3% in 2013, as some of the froth comes off all but the super prime central London market.
Many expect that the South East, South West and East Anglia will also see new sellers coming to market at prices around 3% higher than in 2012. The average will be buoyed by the South East in particular, which has underperformed in recent years, and the ripple effect of higher values in London will mean buyers from the capital will find value in the Home Counties and lenders will be keen to lend.
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Rightmove sees the East Midlands, West Midlands, Wales, North West, the North and Yorkshire as well as Humberside showing patchy marginal growth of around 1% in new seller asking prices. Investor activity will underpin prices at the bottom end of the market where investors react to rental yields in excess of 6% of the purchase price. ‘Average national house prices in 2013 will be less affected by the often distorting impact of London. However, this will be compensated for by a stronger market in other parts of The South and a continuation of the signs of life seen in some parts of The North at the back end of this year’, said Rightmove director and housing market analyst Miles Shipside.
‘Conditions will remain patchy within regions, with new sellers’ pricing power reflected by local micro-market conditions of supply and demand. Sellers of some property types in less desirable locations will remain blighted by the mortgage famine and travails of the wider economy, and they will have to come to the market at lower asking prices if they wish to sell,’ he added.
Shipside believes that there are several reasons for a slightly more optimistic market next year – ‘There is a positive combination of lenders with greater funds to lend and buyers with a five year itch to move. Many movers have had to put their housing aspirations on hold since the onset of the credit crunch, but increased competition among lenders and the slow but steady increase in affordability of house prices may help some to finally move on,’ he explained. However, he does expects transaction levels to remain muted, though a marginal uplift is likely due to a slight relaxation in mortgage lending criteria as the Funding for Lending Scheme (FLS) increases successful mortgage applications.
‘We foresee greater competition among lenders, fuelled by the FLS and a desire to hit lending targets in the first half of 2013. This will feed through to a slight relaxation in deposit requirements and interest rates for attractive mortgage applicants. On top of the small uplift seen in 2012, we anticipate a further marginal but encouraging boost to mortgage lending giving the wider market a generally more positive outlook for next year. This will be particularly welcomed by frustrated first time buyers,’ said Shipside.