The year 2011 was a difficult time for the UK housing sales industry. Fears about the UK economy, unemployment and lower household incomes, plus the increased difficulty in getting financing have all affected the housing market adversely.
Not surprisingly, in 2011, house prices went down all over the UK. Based on figures collected until September, Northern Ireland saw the greatest drop, with a -5.8% change from prices in 2010. It was followed by England, with a -2.9% average in the year-to-year price differences among its nine regions. Specifically, only Greater London saw an increase in prices by 2.3%. Everywhere else in England, prices dropped: East Anglia prices moved -3.1%; East Midlands, -2.6%; North, -7.8%; North West, -2.4%; South East, -2.9%; South West, -2.7%; West Midland, -3.8; and Yorks and Humber, -3.3%.
In Wales, the figure was at -2.3%. Scotland saw the least movement, albeit still a downward one, at -0.2%.
For 2012, experts are not optimistic. Howard Archer, an economist at IHS Global Insight, believes that weak economic fundamentals will outweigh the extended low interest rates, resulting in a 5% fall from 2011 levels by the middle of 2012.
Henry Pryor is a little more specific, saying that while London may seem to have fared well enough in 2011, this will not stay the case in 2012. “Even the prosperous south east will stall in 2012.” While Wales and Northern Ireland are also expected to retain their negative figures, the greatest setback is foreseen in the south west, with prices falling by 10%.
Martin Wade, director at Your Mortgage Decisions, is a bit more optimistic for London, stating that it would not be surprising to see 5-10% gains in the nearby surrounding areas, but he also foresees a 5-10% decline in other areas, especially in the places where the unemployment rates are highest.
With such figures foreseen in the near future, experts advise that you think twice before you buy property in the UK in the coming years.
Marc Goldberg, who heads the sales department at Hamptons, recommends that if you’re upsizing, make sure that the sale for your own house is well under way before you begin negotiations for the property you’re looking at.
Pryor adds that while you may not be able to sell your home for as much as you were expecting, you should only pay attention to two numbers: what you get for your old home and what you’re paying for the new one. Remember that while the value of the house you’re selling may have been adversely affected, it’s pretty likely that the value of the house you’re buying has been affected in the same way.
Wade says that while real estate purchases are still good long-term investments, we can’t expect great gains over the short term or even the medium term. It would be more prudent, therefore, to consider real estate purchases in the UK these days as ‘getting a place to live’ rather than ‘making an investment.’
If you’re looking for investments rather than residences, it would be wiser at this time to look outside of the UK, where homes are going at far better prices, so your chances of higher returns are better. For instance, check out prime property in Portugal for sale; there are some that are currently going at a third of their price from just a few years ago.
In these days when every euro counts, these investments abroad can give your better returns than a UK real estate investment can.