Knight Frank have published their latest research into the housing market and it suggests that UK house prices will not reach their 2007 peak until 2019. If so this will be the longest ever time it has taken the housing to recover. Knight Frank believe that in 2013 UK housing transactions will increase by 2% but they will remain well below peak levels for the rest of the decade.
The London market has been very resilient but this research suggests that tax changes will have an impact and they do not expect any price movement in London property in 2013.
Knight Frank’s website will be worth a visit for landlord insurance clients wishing to get an insight into the prospects for the market over the next few years. Their Head of UK Residential Research says that the housing sector in the UK still does not bear the hallmarks of a fully functioning market – five years after the start of the financial crisis. “Transaction levels have halved since the last market peak in 2007”. What might be of great concern to landlords of residential property is that Knight Frank say that the relationship between average earnings and average house prices is well above the long term average. This suggests to Knight Frank that “a further correction in prices is needed”. Residential landlords do not want to see the capital values of their buy to let portfolios going down. However, this research points out that first time buyers without hefty deposits are still finding it hard to get on to the housing ladder and if this trend continues it will support the letting market. Knight Frank point out that the government has launched schemes such as Firstbuy and Newbuy to try to help with this problem. It remains to be seen how many people will benefit.
Knight Frank are also forecasting another small dip in prime country house prices in 2013. Few of our landlord insurance clients will be too concerned about that!