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London Will Continue to Outperform Rest of the UK
Hamptons International predict sales values will fall 2% across the UK in 2012, with levels in the south remaining flat and the London market willcontinue to attract investors and drive market conditions.
The agency predicts a continued depressed sterling exchange rate will support international demand in prime central London. With the capital continuing to represent a safe haven for investment, prices in the prime market will grow by +4% next year.
Country markets in the south of England will see a modest decline from the flat market of 2011. The rest of the UK is expected to improve modestly but this will only slow the declines of 2011 rather than produce positive price movements.
Mark Goldberg, head of sales at Hamptons International, said: “Set against a backdrop of continued economic uncertainty, we are expecting the 2012 property market to be a more conservative re-run of 2011. We expect to see a marginal increase in transaction levels throughout 2012, with much less diversity in price movements - just as we expect the declines in activity in the south of the UK and nationwide to slow, so too do we expect the sometimes meteoric rises in prime central London to moderate.”
In relation to the lettings market, Hamptons predicts the strong market seen this year will improve marginally in 2012, with 2% growth across the south of the UK. London is expected to see more growth, with a 5% increase in prices (3% in prime London).
The high rents in central London will continue to push demand further out as renters are unable to stretch budgets. This will support rental growth in areas of inner London such as Islington, Ealing, Clapham and further out towards Wimbledon, Richmond, Esher and Guildford.
Lesley Cairns, head of lettings at Hamptons International, said: “We are expecting the rental market boom to continue in prime and Greater London, driven by a continued imbalance between supply and demand. For the first time ever, the private rented sector will house more people in the UK than the social rented sector, which will put continued pressure on prices.
“Rents are likely to continue to rise, although this rise will be moderated as tenants find ever-more creative ways to make life more affordable. We are already seeing increasing numbers of flat sharers and “outmigrators” looking for a similar quality of stock and location but prepared to move from Zone one to Zones two, three and four to find it. Both of these trends are likely to become more widespread throughout 2012.”
