Will 2012 be the year the market recovers?

In 2012, the UK property market is likely to see a different kind of performance when compared to 2011. Last year, what we saw was a distinct increase in the number of people who were living in rental homes, as many could not afford the mortgage to buy their own property.

One change which is predicted in 2012 is that the market as a whole will be looked at less, as people analyse smaller 'micro-markets' in order to get a better overall view of how property is performing.

Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said that it is likely that taking the market as a whole will only lead to skewed figures come the end of the year.

"You therefore get enclaves which are busier and better than others - even within a town you get micro-markets where certain rows and certain types of property are better than others," he added.

Some are also expecting there to be a slight rise in the number of people looking to buy houses in 2012, as they have reported an increase in the number of people who are feeling confident that they can afford to buy.

In December, the Royal Institute of Chartered Surveyors (RICS), said that it had seen a jump in demand for property in November, as its members reported an increase in activity in terms of people enquiring about properties for sale.

This was not a notion which was echoed by Mr Bolton King however, as he said that the NAEA expects to see the market remain flat this year because most people cannot afford to buy, or simply do not have the sort of confidence in the market to do so.

He said that his company expects to see the market remain "relatively flat", as lending remains tight from most of the high street banks, and people's confidence in the market remains low, keeping the number of transactions much the same as in 2011.

It is also likely that the economic situation will stay the same, not improving greatly any time in the near future.

The Building Societies Association (BSA) agreed with this notion, thanks to the results of a survey, when it reported that, in December, while 44 per cent of respondents believed it was now a good time to purchase a home, only 12 per cent admitted that they would have the confidence themselves to buy at the moment.

If most of the market is to stay similar in 2012 though, what will this mean for the UK's shining star? For much of last year, property in London far outperformed everywhere else in the country, due to the fact that demand for property has remained high.

While much of the market remained mostly flat in 2011, London property saw house prices rise continuously, and Knight Frank reported earlier this month that the total increase in prices in London over the year was 3.6 per cent, a stark difference when compared to the rest of the country, with Nationwide reporting a year-on-year national average increase of just one per cent.

According to the predictions for this particular "micro-market" in 2012 from Knight Frank, however, it is expected that property in London will experience a slight fall over the next 12 months.

Its Prime Global Report for 2012 has predicted that property will see a decline of 3.7 per cent this year, before making a comeback in 2013.

This is not a view which is shared by everyone however, an Peter Bolton King said that the NAEA is still predicting that London property will continue to sit head and shoulders above the rest of the market.

"I think you are going to get property prices in London and the south-east staying the same or maybe in some places shifting upwards."

In 2012, London will also welcome the Olympic Games to the city, meaning that there could be a further increase in the number of people who want to live in the city.

"In the medium-term - and certainly after the event - it will be positive because people will have looked at the area and will say, 'Hang on a minute, this might be an area in which I would like to live or invest'," said Mr Bolton King.

So, overall for 2012, the most likely scenario is that property prices will remain relatively flat, as lending and confidence both remain low throughout the country. Even the country's star performer, London, may not see the same level of positive performance as it has done in the past.