The UK housing market endured numerous ups and downs this year as the country attempted to pull itself out of the recession that had stifled much activity throughout the previous 18 months. Some breakthroughs were made – such as the abolition of stamp duty for homes under £250,000 (thanks to a successful campaign by the NAEA and ARLA), lifting a barrier that had prevented so many first time buyers from having the opportunity to buy. However, the continued problem of lenders who are reluctant to offer realistic mortgage deals to would-be homeowners, has forced many to rely on the rental market, preventing a full recovery.

This unwillingness to relax lending restrictions looks likely to remain in place during 2011, particularly in light of the MMR. As the effects of the coalition government’s deficit reduction plans begin to be felt across many different sectors, and not least the property sector, more and more people hoping to get a foot on the housing ladder will have to offer higher deposits upfront to secure a mortgage as the banks look to cut down on their exposure to risk.

We are in the tentative stages of recovery at present, and the property market is still fragile. But as the situation improves, a key issue house hunters will face is the emergence of ‘postcode power’.  As demand for properties for sale in some areas helps to boost the housing market on a local-level, the inverse reaction will occur in less desirable parts of the UK thereby increasing the disparity between the two. Ideally, UK estate agents would like to see the housing market growing equally across the country to ensure its stability and enable consumers across the country to own their own homes.

The NAEA doesn’t anticipate a widespread drop in house prices in 2011. We are unlikely to get the sudden plunges that occurred during 2008 and 2009 but expect a mixed picture with enquiries fluctuating month-on-month as a backlog of pent-up demand for property emerges.

Of course, the key to the success of the housing market next year lies in the decisions made by the major institutions and influential figures within Government. The FSA, the Housing Minister Grant Shapps and, most importantly, the banks, all have a part to play in ensuring that transactional activity doesn’t seize up, and that confidence is restored.

In particular, we hope to see the removal of stringent bank restrictions on mortgage lending and a positive decision by the Monetary Policy Committee on interest rate levels during this year. The NAEA recognises the need for a reduction in the UK’s deficit, but this shouldn’t come at the expense of the UK property market, to which the aspirations and finances of so many families are inextricably linked.