The performance of the UK property market was disappointing in 2012, with growth of just 1% by the Land Registry’s measures. Strong growth in London and the South-east helped to offset losses in most of the UK.
Even prime central London may be on the brink of retreat as property specialists claim tax reforms could hit the market in the coming year.
Knight Frank, which currently places the UK in the middle of the longest housing market recovery on record, says it expects the prime central London market will undergo no further price moves in 2013. It attributes this impending slowdown primarily to tax changes; namely the introduction of a 7% Stamp Duty Rate on properties valued at £2 Million or more in March as part of the Budget.
This view is shared by property agents Savills, although its research shows the prime central London market has already started to slow.
World research director Yolande Barnes says: “Buyers should now expect price growth to hover around zero in 2013, particularly as the prime central London market absorbs the impact of increased taxation.
Nationwide chief economist Robert Gardner suggests an improvement in the overall situation in the Eurozone could also present a contributing factor since the prime central London market has benefited so prominently from foreign capital inflows.
He says: “Part of London’s out-performance is reflected in safe havens of money flows from the Eurozone, which has disproportionately benefited London, especially the top of the market. Whether or not that is maintained over the next year will depend on the developments in the Eurozone and the market stability of other EU states.”
There is optimism for the super-prime property market and growth is expected to continue, the prime London property market is expected to stall (at least for 2013) and the majority of the rest of the UK is expected to see nil or negative growth. Regional factors will affect the housing valuations, such as corporate failure, Public Sector shrinkage and weakness in demand and the valuations could see serious declines.
If property is your investment focus expect poor returns in 2013.
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