Buyers are buying and sellers are selling, so is it possible that 2013 could be the year that property becomes positive news again? Propertywide looks at the market.
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After a difficult few years, homeowners can breathe a sigh of relief as property prices are set to rise in 2013. According to the Halifax Housing Market Confidence Tracker, nearly four in 10 people believe that property prices will rise over the next 12 months. More than half (53%) of those polled think that 2013 is a good year to buy, however only 13% think it would be a good time to sell.
Martin Ellis, housing economist at Halifax, explained: “Conditions in the housing market have been largely unchanged over the past 12 months with little overall movement in either house prices or sales for the second consecutive year. This remarkable stability, given the poor domestic and overseas economic climate, has probably been a key driver of the improvement in sentiment regarding the outlook for house prices over the coming year.”
West Country property in particular looks promising for 2013 as estate agents report that enquiries for houses with cottage lets are up by 50%. Owners looking to let their property could earn an average of £12,000 to £15,000 a year, according to Napoleon Wilcox, head of Webbers Fine & Country.
London, however, is leading the way with prices expected to rise by 3% to 4.5% by 2014, according to estate agent Savills.
The north-south property gap could widen as property in the south is likely to rise whilst house prices will dip in the north.
London is a hub of activity in the property market, being one of the few places in the country where prices are rising. This is great news for homeowners who have become accidental millionaires as their properties drastically increase in value. Around 43% of homes in the capital are valued at £1 million, which marks an 8% increase in the last 12 months alone!
According to London market monitor, Marsh & Parsons, property wealth is spreading out of those traditional big money zones such as Kensington and Chelsea to the south and west such as Balham, Clapham and Brook Green.
Peter Rollings, chief executive of Marsh & Parsons said: “Properties no longer have to be palatial to be worth £1million.”
Further research from Nationwide suggests that London homebuyers are paying significantly more just to live close to a train or tube line. There is a massive £26,000 premium for a property which is 500m from the nearest station, compared with a similar property 1,500m from a station. On average, London houses closest to the Circle Line stations are the most expensive and those nearest the Central line are the cheapest.
“A property located 500m from a station attracts a 9% price premium (approximately £26,000 on a typical London home) over an otherwise identical property 1,500m from a station,” said Robert Gardner, Nationwide’s Chief Economist.
“This price premium is two percentage points higher than when we conducted similar research in 2010, where the data suggested a 7% premium.”
This trend is likely to continue throughout 2013 as London property prices show no signs of slowing down. The demand is high which pushes up the cost in surrounding areas as well. 2013 will see the emergence of more micro markets in popular commuter towns closer to the city. According to Savills, areas such as Sevenoaks, Guildford and Beaconsfield will see house prices rise by 1%. Over the next five years property value is expected to increase by as much as 21% in prime inner commuter zones and by 19% in the outer commuter zones.
Whilst this is fantastic news if you happen to own a property in or around the city, this does little to comfort those who are renting. The cost of rent reached record high levels in 2012 and will continue to rise in 2013. Search agent, Finders Keepers estimates that rental rates will increase by 18% in the next five years and the majority of first-time renters are now in their late twenties or early thirties. This is significantly older than five years ago, reflecting the long lasting damage of the economic crisis as many young adults struggle to find work and are weighed down in student debt.
A study by Halifax found that a massive 66% of people expect the cost of renting to increase in the next year. With rental price increases, this hampers the chance for first time buyers to save for a deposit and make the jump into the world of homeownership.