2012: Jones Lang LaSalle Joins The Pessimists

Jones Lang LaSalle, now seen by many within the residential side of property as being at least on a par with Savills and Knight Frank research teams, says mainstream house prices will dip one per cent in 2012 with no increase in transaction volumes, before modest growth resumes in 2013.

It's a familiar forecast - most other agencies have come up with precisely the same conclusions, including the expectation that the Midlands and northern English mainstream markets will perform less well, while prime central London will defy the trend and its average prices will grow in 2012 by some seven per cent. But JLL does explore some parts of the market that other forecasters omit, especially new developments - a JLL specialism.

The firm says 'best new London developments' will grow by three per cent in 2012 and will grow from three to five per cent each year thereafter - outatripping the performance of the rest of the UK market with the exception of prime central London itself.

JLL is gloomy on total transaction numbers, however. Remember that in 2005 there were 1.3m transactions across the UK - JLL says the current 580,000 will continue through next year and after that there will be sluggish growth, with the total not breaking the one million barrier again until 2015.JLL research director Jon Neale - who was an Estates Gazette journalist before working in the research departments of Knight Frank and the Homes and Communities Agency - says: “The Eurozone crisis, combined with a stricter global regulatory environment, suggests that the mortgage market will not rapidly return to the conditions seen for much of the 20 years leading up to the financial crisis.”

The winner out of all this is, of course, the rental sector - or more precisely the landlord. “The rental sector is increasingly becoming the norm with owner-occupation reserved for the wealthy few. In 2009/10, some 58 per cent of all those moving house were becoming tenants, while 70 per cent of new households found their home within the [rental] sector.”

According to Neale, between 2007 and 2010 alone, an additional 664,000 households became tenants. Over the same period, the number of owner-occupiers dropped by 208,000, and the number of people with mortgages dropped by 532,000. JLL says London rents will rise 12 per cent next year while rents across the rest of the UK will go up by five per cent.

It may well be a happy new year for landlords...but not anyone else.

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