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2013 property forecast - what's next for property in London?

Tuesday 20th November 2012

It is that time of year again. Experts are already giving their predictions for 2013, and it appears to be a fairly mixed bag of reviews.

Confidence in property price prospects is significantly stronger than it was at the beginning of the year, although the majority of people think that any house price change over the next twelve months will be marginal.

Just over a third of people surveyed by the Halifax recently forecast that the average UK home price will increase over the next year, while a fifth of predict a decline.

But despite a relatively stable picture overall, regional differences will almost certainly continue to dominate the market in the UK.

The latest data from the Office for National Statistics (ONS) show that residential property prices in London increased by an average of 5.2% in the year to September, while they depreciated by 10.1% over the same period in Northern Ireland.

ONS figures reveal that UK house prices appreciated by an average of 1.7% in the 12 months to September. But will this relative stability provide a sounder springboard for 2013?

This week we gain expert opinions on the property market in London:

LONDON

This was a unique year for London, which benefitted from the Olympic Games, the Jubilee Celebrations, and in some ways the continued economic uncertainty around the world.

A number of wealthy overseas nationals have moved to London in the past year to escape the global financial uncertainty, as the capital is seen a safe haven.

The growing supply-demand imbalance in London has pushed property prices higher, led by prime central London prices, where values are almost 50% higher than their post-Lehman low, reached in March 2009, according to Knight Frank, with further growth anticipated by some.

Catherine Penman, head of Research at Carter Jones, says: “The London sales market continues to be dominated by foreign purchasers, although domestic buyers have reactivated their interest in recent months; largely due to resilient and, in some cases, rising values within the Capital in sharp contrast to continual reduction in values witnessed throughout the UK regional housing market.

“The pricing gap between the capital and the regions is now perceived to be at its largest and has resulted in families delaying the move to the country in order to take advantage of rising property values witnessed across the prime London residential markets.”

Ed Mead, director at Douglas & Gordon, forecasts for 2013: “Average house prices in central London are expected to increase by 7.5-10% over the course of 2013 but volumes, especially in excess of £2m, will fall, possibly by 10%.

“Outside the centre prices will increase by 5-10% with a similar increase in volumes as cheap mortgages fuel increasing demand.”

Roarie Scarisbrick, partner at independent buying agents Property Vision, comments: “The autumn has revived the market and there are definite signs of life, with transactions throughout the market once again, and records tumbling. The demographics and the drivers are as broad as ever, but there seems to be an even greater appetite than usual from the Middle East and North Africa, and there is of course a small, French feeding frenzy going on, courtesy of M. Hollande.

“There may be some good opportunities out there if you can identify a seriously motivated seller. However, this can be easier said than done.”

Yolande Barnes, director, Savills world research, comments: “After such strong growth, we now expect prices to plateau in 2013. Increased taxation, including the stamp duty levy, strengthening Sterling and a weakened global economic outlook could all provide catalysts for a slowdown, but the fundamentals in prime London remain strong so we expect that growth will resume in 2014.”

Trevor Abrahamson, of estate agent Glentree Estates, said: “We are building 5% of the properties we need in the Capital and new development is as constrained as ever before by the labyrinthine planning processes and acute shortage of funding for property development. Therefore these factors conspire to reduce the supply whilst the demand remains steady and for this reason I don’t believe prices will ease.”

Gary Hersham FNAEA, director at Beauchamp Estates, said: “The upper echelons of the market in particular [properties valued above £5m], where Beauchamp Estates specialise, continue to attract significant interest from global wealth and has outperformed the rest of the London market.

“We remain confident in the strength and durability of the market and forecast that residential values for the best properties in the capital will rise by 4%-5% next year.”

Camilla Dell, Black Brick buying agents, commented: “We believe London will continue to be a sellers’ market, particularly in key prime areas and addresses, where supply is limited. We have taken part in several sealed bids on behalf of our clients this year, and we predict the same will happen next year.”

Simon Barnes, buying agent, said: “Looking ahead to 2013, I suspect that the demand for prestigious, trophy homes in the prime addresses will continue. Restricted lending to developers throughout 2012, caused a lack of newly developed properties and unfulfilled buying requirements. But this looks likely to improve slightly, with more developments in the pipeline, enabled by funding coming from outside sources and private equity.”

              

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