The Royal Institute of Chartered Surveyor’s economic forecast for December 04/January 05, shows the commercial property and construction markets are looking forward to a bumper 2005, while residential is on a weak footing.
It also says buy-to-let landlords show few signs of panicking, and financial returns for property out-performing other major asset classes again, institutional investors are steaming in and private investors continue to pour money into the market.
The government is expecting a huge uplift in public sector construction in 2005 following a large underspend in 2004.
Concerning residential property, RICS says growing affordability constraints and uncertainty as to the direction of the housing market have been reflected in a slowdown in sale transactions.
House price inflation has also slowed sharply says mortgage lenders.
However, there is no notable distress in the household sector, whilst buy-to-let landlords show few signs of panicking
On the commercial property side, it says trhe occupier market appears to be bottoming out as demand conditions have improved gradually through 2004.
A turnaround in activity within the office market has brought about stability in rents. However, retail enquiries for space have declined as competitive pressures continue to squeeze profitability.
Investment demand for commercial property remains strong, with financial returns for property out-performing other major asset classes again.
On the construction side of things, a steady picture of rising activity continues in the construction industry.
While commercial building activity was the main source of growth in 2004, following a drop in output in 2003.
House building in both public and private sectors is still firm but the housing market slowdown may weaken activity going forward.
Slowing public works activity has been evident for some time but the government is expecting a huge uplift in 2005 following a large underspend in 2004.
Growth in economic output for the third quarter showed a sharp slowdown.
Some slowdown in growth is not unexpected due to weaker signals emanating from business surveys over the summer.
Manufacturing activity has been disappointing, being the main drag on the economy.
Government expects growth rebound in 2005 on stronger export sales and business investment