2011 has been an undeniably tumultous year. The political climate has changed almost across the entire globe, and the financial markets have taken a battering from all side. But what effect has all this had on the property market in the UK?
Well, perhaps surprisingly, the UK housing market has seen a limited shift. Compare property prices to 2010 and in most UK regions you'll find relatively little difference, with the possible exception of London. According to the Financial Times, average UK prices were down 1 percent in 2011, caused by low interest rates helping offset a weak demand. Indeed the weak deman is what is driving the market at the moment, as the gloomy economic outlook casts a shadow over people's future plans.
In London prices rose by 0.3% in 2011 up to October, and this was the only region in the entire UK that experienced an increase to prices. In reality though, this rise was only really caused by a rise in prices in the premium London market. In Kensington & Chelsea prices rose by a massive average of 10.1%, and the Olympic borough of Newham went up by 1.4% in addition, but many nearby regions saw drops of around 1%.
The shadow cast over the rest of the UK property market was significant. In the Midlands, prices fell by an average of 3-4%, and in the North East the decline was almost double that figure. Whilst the North was particularly hit, the South didn't escape the doom and gloom and saw similar drops.And how do all these prices compare to the January 2008 peak pre-crash? Average houses property prices have drop an incredible 12% under their peak, with some regions seeing an almost 30% drop.
The shift to the rental market has been pertinent, and rent prices continue to rise across the country to cover the lack of buying. The whole structure to the housing market is shifting, and whether that is a temporary or permanent feature, perhaps only 2012 will have the answer.
