Cheadle house market forecast for 2012 by Maurice Kilbride

2011 has been a traumatic year for the house market.

Nationally the number of housing transactions is currently about half the pre-credit crunch level and next year's outlook is massively influenced by how the Eurozone debt crisis plays out. The major mortgage lenders rely for some of their funding, and in particular for their marginal funding, on the wholesale money markets. As, over the last few months, the markets have become increasingly concerned about how this crisis will be resolved the cost of borrowing new funds has shot up.

 If the euro collapses the consequences on our banking sector will be severe because of the global nature of banking and the huge write-offs, which will be necessary on loans made to Eurozone banks which will become insolvent.

 The result of this will be that mortgage lenders will have no choice other than to reduce lending which will have a negative impact on the level of activity in the housing market and possibly on property prices.

 I expect demand from buyers next year to be pretty constant or maybe even slightly higher, despite continuing difficult mortgage conditions and a gloomy economic outlook which may sap consumer confidence further, with unemployment, or the fear of it, a particular worry for many. The pressure on families disposable incomes will also be significant.

 I expect to see the number of property transactions in 2012 to remain similiar to 2011 or perhaps even fall a little further. Its difficult to predict how prices will go although as this year there will be significant variations throughout the UK and depending on property type, but here in Cheadle with demand clearly rising towards the end of the year and the supply of suitable properties diminishes, I can see a slight upward pressure on prices, although in order for confidence and sustainable improvement it remains imperative that prices reflect the conditions of the market, but I actually believe it might be a better time to sell than many people think.