Property Outlook for 2012

January 11, 2012 / Russell Legato, Residential Property Analyst

The residential housing market continues to be slow. It became rather stagnant in 2011. It is predicted to be even slower in 2012. A dismal picture is painted of the property outlook when it comes to home sales. The price of a house increased 6 percent in 2009 and slowed down since then. In spite of the enticement of low interest rates, houses continue to sit on the market, unsold.

Property Outlook for 2012

Residential property values crept up slightly in 2010 and 2011. But, when adjusted for inflation, it was a decline in actuality. The decline is estimated at 1.9 percent. However, the final word is not in on that number since December figures for 2011 are not included.

The explanation for the continued weak market in 2011 is the size of the supply-demand figures. Supply, of course is still bigger than demand. The demand rating and supply rating are based on a 0 to 100 scale. Perfect is 50 percent and anything below 50 percent indicates an excess of supply. Market strength remains significantly lower than 50 percent.

The 2012 economy looks unimpressive at best, with supply remaining considerably stronger than demand. The International Monetary Fund is considering a decrease in their predictions for economic growth in 2012. The stagnant housing market is dependent on global and domestic economic conditions.

The trend in housing is predicted to see smaller and more efficient to run homes reigning in popularity over more expensive properties. Prospective buyers will seek homes close to where their job is located. High priced fuel and tolls in some areas lead to them wanting the close proximity. What property outlook there is for sales will favor those properties on the lower end of the scale.

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