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The Market Magazine – The 2012 Property Market

Louisa Fletcher asked the best UK property experts for their opinions on this year’s residential property market, and what they thought 2012 might bring. Read on to discover if you’re going to need Sou’westers of Factor 30 for the New Year…

James Caan, Chairman, 90 North Real Estate Partners

Louisa Fletcher asked the best UK property experts for their opinions on this year’s residential property market, and what they thought 2012 might bring. Read on to discover if you’re going to need Sou’westers of Factor 30 for the New Year…

James Caan, Chairman, 90 North Real Estate Partners

There are still pockets of growth within the UK market, but we are now looking at a collection of ‘mini markets’, rather than simply regions or cities being ‘the place to buy’. There will always be a separate London microcosm, supported by international investment; overseas buyers perceive London as a ‘safe haven’ for investment, therefore values are likely to continue to rise over the next five years, with 2012 being no exception. The Southeast is also likely to remain strong, driven by demand from those working in higher paid jobs in the City who are not reliant on lending for their next purchase. These ‘discretionary’ buyers are keeping the market in the Home Counties moving. Outside of that, I’m not too optimistic about residential property in the UK for the next year or so.

It would be helpful if the Government was to invest in better education for young people in terms of personal finance. Because the mindset in the UK is geared to getting on the property ladder as early as possible, as other generations did previously, this means young people are burdened with debt and lose the opportunity to invest wisely and grow their capital prior to buying their first home. If the Government was able to help young people better manage their finances and make more intelligent decisions with regard to their savings and investments, the net result would be a generation that is better able to make more long-term, financially responsible decisions. This would ensure issues such as toxic debt, which crippled the banking system, remain under control.

In terms of next hotspots, it’s not so much where, but what. We will be investing heavily in student accommodation, as this continues to be a growth area. While it is possible to pick up properties around the ‘red bricks’ such as Oxford and Cambridge, the better opportunities are the second-tier universities where the potential for privately owned student accommodation hasn’t yet been fully exploited.

What advice do you have for those who are considering investing in UK property in 2012?

There is still massive potential in buy to let because of the rising tide of people not being able to afford their own home. It’s possible to find pockets of demand in every town or city; it’s just understanding the dynamics that surrounds them. In most places, there will be a certain type of property that is consistently in demand, in which case void periods will be lower, positively affecting incomes. Speak with agents within the area; understand what’s in short supply and what they are looking for. Also bear in mind your objectives. Are you looking for capital growth, or monthly income? Be clear about your exit strategy. In London, a two-bedroom flat is a liquid asset, as they are always in demand for all types of buyers, therefore the marketing and sales cycle is relatively short. In other cities, however, family housing is a better buy as there is an oversupply of flats. Factor in how long you want to retain the property for and what constitutes a ‘liquid asset’ in the area you’re looking to buy into.

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