Although residential property values will fall marginally in 2012, house prices will start to rise again next year and could increase by as much as 8% over the next three years, according to the latest CBRE house price forecast.
Prime central London will continue to outperform the wider housing market with values increasing by 6% in 2012 and by a total of 22% over the next three years.
«Despite the market being characterised by monthly fluctuations, the longer term outlook for the housing market is fairly static. We don’t expect it to pick up until the economy fundamentally improves", said Jennet Siebrits, head of residential research, CBRE.
"Low interest rates are continuing to stave off repossessions and forced sales, but a substantial proportion of would be buyers remain unable to move. Ultimately, bank lending still needs to loosen further to spur on housing market activity", - Siebrits added.
Buyers of homes over £2 million will face an additional £40 000 bill following the introduction of the 7% rate of Stamp Duty Land Tax (SDLT). However, of more concern is the new 15% SDLT rate for «non natural persons».
"Property prices in prime central London have increased by 30% over the last two years, so the additional expense incurred by the introduction of the new 7% rate has to be viewed within the context of the significant and ongoing price rises in high value homes", - explained Siebrits.
"The new regulation designed to prevent overseas buyers avoiding SDLT could have unintended consequences as it also captures UK domiciled companies. However, it must be stressed that this only affects a small proportion of the market as transactions of homes over £2 million only accounted for 0,25% of the market last year across England and Wales", - she added.