"Over the next 12 months, property transactions are likely to remain subdued at around 575,000 for the whole year, compared to 1.6 million in the height of the 2006 property boom. We also expect to see the highest ever proportion of new build transactions compared to second-hand properties.
"This increase is likely to be a result of incentives offered by developers in what is still a challenging lending market and the flexibility that larger developers are able to offer. For some aspiring homeowners, buying a property through the first buy scheme or through part exchange may be their only option when looking to move up the property ladder."
New builds and developers
"Purchases of new builds in 2013 are likely to be significantly higher proportionally to second-hand properties. This is ultimately driven by the increased number of new build properties that are coming on to the market. These tend to be a popular choice as developers are in a position to offer incentives and flexibility that enable aspiring homeowners to purchase property with lower deposits in what is likely to remain a challenging lending environment. As a result, we will see fewer second-hand properties coming on to market as people move out of necessity due to lifestyle change rather than out of aspiration.
"In order to accommodate the growing needs of home buyers when faced with fewer second-hand properties to choose from and less funding with which to buy, developers should concentrate on creating more varied new builds with added character such as higher ceilings, bigger windows and low cost differentiators such as alcoves, mouldings and ceilings drops.
"First-time buyers are reluctant to compromise on purchasing their first property as they witness second steppers stuck and unable to move on to their next home as their property hasn’t appreciated in value and they are left with very little equity. Instead they are having to wait much longer to save up a larger deposit or look to secure larger new build properties by taking advantage of incentives offered by developers.
"Generations of buyers will continue to delay purchasing homes as they view buying property as a longer term investment than previous generations have done. The move cycle is becoming much longer due to the lack of available funding and we are beginning to see a trend of people moving only every 20 years or so."
Squeeze on private rented sector
"These factors will place greater pressure on the private rented sector as people opt to rent out the property they have a mortgage on and rent elsewhere instead of selling their home and moving up the property ladder. Younger generations are also tending to rent for longer periods before choosing to buy. If things stay as they are, home moves will continue to be supported by the bank of mum and dad and the buy-to-let market.
"To ease the pressure on the private rented sector, prices need to be addressed. More affordable rents will help to drive house prices down. We are unlikely to see any inflationary pressure on prices in most areas; however any uptick in housing supply could potentially erode house prices. If interest rates did suddenly rise, home owners would struggle with the repayments, particularly in the face of increased costs of living. One of the biggest issues of 2013 will be how low paid workers in high value regions can continue to rent.
"We will continue to see more competition in the rented sector for landlords to attract better tenants. The standard of rental accommodation is likely to increase as landlords look to secure tenants for longer rental terms. Those interested in corporate lets or with secure employment tend to be much choosier when selecting a home for rent as they intend to stay in it for much longer."
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