An interesting trend of this winter’s property forecasts is that the estate agents and even a few developers are generally more pessimistic than some of the business consultancies – in past years, it has been very much the reverse.
Hamptons International is the latest to fall in line with this trend: it says mainstream house prices will drop 4% across the UK but top end markets will do rather better. So Greater London will be up 3% on average, prime central London up 5%, and the wider south of England (roughly the region where Hamptons operates) will stand still, so at least avoiding the falls which the firm implicitly predicts elsewhere.
Like Savills, it says quite overtly that there will be a North-South divide – London and the Home Counties will be bolstered by £7 billion of City bonuses, while the north will be more vulnerable to the coalition’s austerity measures as it has a large public sector. Hamptons does not specify what will happen in the Midlands, northern England or Scotland, but says the markets there will remain “subdued”
The agency echoes the industry consensus that the private rental market will continue to prosper “although improving yields should encourage investors to increase the supply of rental properties” cautions Hamptons’ new head of research, Adam Challis.
Although he declines to forecast beyond 2011, Challis says wider economic indicators – such as Standard & Poor’s saying Britain is now unlikely to lose its triple-A credit status – suggest the outlook is more optimistic in the longer term.
However, Hamptons refers to continued mortgage constraints preventing the market to return to “a normal level of transactions”. In this regard it deviates from Savills and some other property industry analysts who believe the current level of transactions has now become ‘the new norm’.
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