Announcing a revised housing market forecast, Chesterton Humberts expects UK average house prices to have dropped by 2.5% at the end of 2012 as economic conditions and other factors continue to impact on the wider economy and regional property markets.

Although some analysts had expected the Eurozone crisis to be resolved and mortgage lending to have increased by this autumn, the UK economy has contracted every quarter so far this year. As such, and despite Government initiatives to try and improve mortgage availability, approvals continue to slump and consumer appetite for borrowing remains weak.

Nick Barnes, Head of Research at Chesterton Humberts, said: “The property market is not in the position we expected it to be in this time last year. The uncertainty surrounding the economy has had a knock on effect, with mortgage lending in particular, the appalling weather we have had since May and the distractions of the Queen’s Diamond Jubilee and the Olympic Games all impacting negatively on property buyer activity.

“However we are slowly starting to see house prices rise in regions outside of London, despite restricted mortgage lending and a lack of trust from consumers. As long as Government initiatives work, such as the recently launched ‘Funding For Lending Scheme’ and barring another economic shockwave, I believe all regions could experience positive average price growth from 2013. In fact we’ve adjusted our 5-year average annual growth projection from +1.8% to +2.6% to reflect this.”

The research states that London will continue to outperform other regional markets in the period 2013-2016, averaging +5.3% per year, followed by the south east of England at 4.1% per annum.
At the other end of the spectrum, the North East will average just 2.9% a year to 2016, which would be a big improvement on its expected 2012 average growth of -4.5%.