There will be several potential stumbling blocks for the property market during 2012.

Lenders will make it much tougher to take out cheap interest-only loans, which have helped prop up the property market.  This is a reduction in credit and will exert downward pressure on prices.

The second problem is that lenders are still cash-strapped and the Eurozone debt crisis is weighing heavily on the banking sector – it may have contributed to a dramatic fall in swap rate money market costs and the fixed rate mortgages that these heavily influence, but if things get worse banks will find their balance sheets in trouble.

Government cuts will also start to filter through soon, as the UK tries to balance the books. That will mean public sector job losses, higher taxes and a dip in confidence.

The cost of moving house is also exorbitant. Those buying family homes in areas where a relatively modest property of this kind costs more than £250,000 face a stamp duty bill of at least £7,500, add estate agent and solicitors’ fees and moving can set a normal family back £15,000 or more, without even having to find the extra cash for a 25 per cent deposit on a more expensive home.

Useful Resources, Advice + Guides From TheAdvisory.co.uk:

> Instant & Free Online House Valuations

> Find Cheapest Conveyancing Fees

> Compare Best Mortgage Deals And Save £1000′s

> The Secret To Selling Your House Fast

Mortgage payments for new borrowers have reached their most affordable levels for 14 years, with typical payments in some areas of Scotland and northern England taking up less than a fifth of disposable incomes, according to research from Halifax.

Average mortgage payments for new borrowers, including first-time buyers and home movers, were 27 per cent of disposable earnings in the fourth quarter of 2011.

This is the lowest proportion since spring 1997 when payments were 26 per cent of income – well below the 37 per cent average over the past 27 years.

The study also highlighted a “clear North/South divide”, with the least affordable areas located in London and the South East.

Kensington and Chelsea in London was named as the least affordable local authority district, with mortgage payments taking up 78 per cent of disposable local earnings.

The Scottish areas of East Ayrshire, where mortgage payments take up 15.7 per cent of take home pay, and West Dunbartonshire and North Ayrshire, where payments account for 16.2 per cent of disposable earnings, were found to be the top three most affordable local authority districts in the UK.

Across the UK, mortgage payments have nearly halved as a proportion of income from their 2007 peak of 48 per cent, as house prices have dropped along with mortgage rates.

The latest reasearch from Acadametrics (UK’s leading housing market analysist) is out. So here are the top 7 facts about UK house prices you need to know…

1. Property prices rose 0.2% to £220,385 in December, but fell 0.5% annually

2. London’s property values are 3.1% higher than last year

3. Wales joins London as the only other region to show annual house price growth

4. Transactions in 2011 fell 2.1% year on year, but activity in the second half of 2011 was faster than the year before

5. UK Average House Price: £220,385

6. Monthly Price Change: Up 0.2%

7. Annual Price Change: Down -0.5%

Richard Sexton, director of e.surv commented: “The final month of 2011 saw a modest rise in prices, which rounded off a year of economic turmoil in which the property market showed remarkable resilience.  Despite the growing fears of a debt crisis in the Eurozone, prices rose 0.7 per cent in the second half of 2011 and, with high inflation and reasonably static prices, this has helped make property more and more affordable.

“While transactions fell slightly in 2011 compared to 2010, the last five months of 2011 all saw higher activity than 2010, boosted by the increasing number of buyers eager to make the most of the affordable – if hard to obtain – mortgage finance coming onto the market.

“But despite prices showing such astonishing staying power, 2012 is set to be another tough year.  With the global economy in a parlous state, the size of mortgage advances, which rose in the last 12 months by 3.5 per cent, could begin to decline.”

The north-south divide in property values, with rising property prices in the south and falling prices in the north, has opened up new opportunities for property investors.

Here is a top five best prospects for northern towns:

1. Edinburgh:
The Scottish capital may benefit from the potential independence vote in 2014, with a host of companies relocating to the city.  A vibrant, cultured and attractive city, Edinburgh is not cheap, but should at least hold its value and see rising yields.

2. Glasgow:
With a mixture of poorer neighbourhoods and grand old houses in some suburbs, Glasgow is far more attractive today than in recent decades.  The Commonwealth Games in 2014 should produce a regeneration bonus and improved transport links.

3. Chester:
Lovely restored and maintained city centre with Roman walls and Tudor buildings, Chester’s property prices are low by the standard of similar towns.  Close to the cities of Manchester and Liverpool, the river Dee flows through the city and it has a charming, relaxed air.

4. Bradford:
Renovated city centre and a cleaned up environment, Bradford has shed its grimy industrial reputation.  Near to Leeds and with its own airport, the city is attracting new families and young professionals.

5. Harrogate:
The gem of Yorkshire, Harrogate Spa is one of the most florid cities, host to a hundred conventions and full of stately stone houses and luxuriant gardens.  Prices have held up well and are likely to keep rising.

Useful Resources, Advice + Guides From TheAdvisory.co.uk:

> Instant & Free Online House Valuations

> Find Cheapest Conveyancing Fees

> Compare Best Mortgage Deals And Save £1000′s

> How To Sell My House Fast

Bank of England data shows that mortgage approvals for house buyers rose to 52,900 from 52,800 in October, which was the highest level in 23 months. Economists expected a fall to 52,500.

“We can derive some encouragement from mortgage approvals holding firm in November.  By that stage, the escalation of the eurozone crisis had begun to exert pressure on the banking system so we could easily have seen approvals slip back,” said Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club.

Despite the rise, mortgage approval levels remain significantly below the 88,000 monthly average since 1993.

Net mortgage lending came in below expectations, halving to £600 million in November from £1.2 billion in October.  Economists had forecast a more modest fall to £900 million.

However, the number of loans for remortgaging declined for the second month in a row to reach 31,154, worth £4.1 billion overall, the lowest figure since June last year.

Useful Resources, Advice + Guides From TheAdvisory.co.uk:

> Instant & Free Online House Valuations

> Find Cheapest Online Conveyancing Fees

> Compare Best Mortgage Deals And Save £1000′s

> How To Sell My House Fast

Worsening economic conditions will lead to more evictions and falling rents, says Linton Chiswick of Citywire Money – and litigation against surveyors is already on the rise as rents fail to meet expectations.

With house prices falling – but not fast enough to release first-time buyers into the market – credit stifled and rents rising, buy-to-let landlords were one of the very few groups who did okay out of the property market in 2011.

Even the banks treated them to favourable mortgage terms and new products aimed at the smaller investor.

But landlords still have to weather the same economic climate as the rest of us. Stalled wages and rising unemployment are in the forecast for 2012, and their effects are unlikely to leave landlords untouched.

There are real fears that borrowers will run into serious arrears as jobs are lost.  And rental properties are more likely to suffer arrears in payment than mortgages, since owner-occupiers have more to lose.

For many people, 2011 was the year in which renting became more expensive than servicing a mortgage.  According to research by Zoopla.co.uk, Swansea, Plymouth and Bournemouth are the three exceptions to the rule among the UK’s 50 biggest towns and cities.  In London, the difference is very high: it is 31 per cent more expensive to rent than to service a mortgage.

New figures from online property valuation service Zoopla.co.uk show that 26,744 more home owners had properties worth £1 million at the end of 2011 than at the same time a year earlier.

“High prime demand” from equity-rich home buyers and relatively low supply of large homes had created 73 new property millionaires every day in 2011, according to Zoopla.  One in 108 homes is now worth £1 million or more.

There are now 253,118 homes valued at more than £1m in Britain and the biggest rise in the number of property millionaires was in London, where the number grew by 18 per cent during 2011.  Four in five homes worth more than £1 million in Britain are in London and the South East, with London accounting for more than half the national total (55 per cent).

“While most of the market is suffering from the impact of inflation, stagnant wage growth, the inability to secure mortgage finance and nervousness about the future of the economy, at the upper end of the market cash and equity rich buyers are enjoying some of the lowest mortgage rates in recent history,” says Nick Leeming of Zoopla.co.uk.

Buy-to-let property investors have done surprisingly well from the famine in mortgage lending, according to new research.

The share of UK residential housing stock owned by private landlords has jumped more than 40 per cent since the financial crisis began in 2008.  It now makes up almost a fifth of the total, according to estate agent Savills.

Stricter lending standards introduced by Britain’s banks since the crisis have created opportunities for investors, as the number of potential homebuyers has fallen.

Savills claims that instead of the capital appreciation that attracted investors during the boom, the prospect of rising rental income is now the main prize.  The volume of mortgages handed to private landlords rose by 16 per cent to £3.8 billion in the third quarter of 2011, according to figures from the Council of Mortgage Lenders.

Even though there has been a fall in property prices since the onset of the recession, first-time buyers are still struggling to get onto the property ladder.

The US is also experiencing a booming rental market, after its housing market took a tumble in the past couple of years. Home ownership levels dropped to 66.9 per cent in 2011, down from 70 per cent in 2005.

In a falling property market, house sellers are naturally reluctant to suffer capital losses, so an increasing number are turning into ‘in-betweeners’ – defined as those who sell their properties in order to rent, waiting for the market to fall sufficiently, when they will buy again.

It’s an attractive thought: imagine selling a £1,000,000 property, renting for a year and then buying the same (or a very close equivalent) for £800,000.  You’ve made a profit of £200,000!

The reality is seldom so easy and clear-cut.

First of all, prices are unlikely to fall by 20 per cent in a year.  Current forecasts are for UK property as a whole to fall by around 6 per cent on average (more in Wales, less in the Midlands and Southeast).  So our notional gain in that case would be around £60,000, if you bought another property for £940,000.

Stamp duty will account for £38,000 of this, and renting could easily eat up the rest, along with the cost of moving home twice.

And what happens if house prices unexpectedly rise while you’re busy renting?  Or it takes twice as long to buy as you’d hoped (thereby costing double on rent)?

Even so, more people are trying it on.

“If you have the nerve, it’s probably the best way to secure a bargain,” says Tracy Kellett, who runs BDI Home Finders.  Because it means you have cash, you are in a very strong position to bargain prices down.  It’s a risky business.  But 2012 could prove to be a year of risky behaviour all round, as the economy places people in new and unexpectedly difficult positions.

If you are thinking of selling in 2012 you may find this article interesting on when is the best time to sell a house.

The capital value growth of UK farmland is forecast to outperform many commodities markets, residential property, UK gilts and West End offices, according to Savills rural research who expects the average value of farmland in the five years from 2012 to increase by 36 per cent.  More immediately the company predicts average growth of 5 per cent for 2012.

This forecast growth follows a substantial rise in average farmland values over the past five years (138 per cent) which was significantly greater than that recorded for either residential or commercial property or equities.

Alex Lawson Director of Savills Farms and Estates comments, “Against a backdrop of economic uncertainty the farmland market is likely to become more diverse in terms of performance, we expect the continuing tightened supply and low interest rates to maintain values for all but the worst quality land.”

Lawson adds: “Farmers continued to be active buyers particularly when the opportunity to buy a neighbouring block of land arose.  There is also undoubtedly demand for the best sporting/residential estate from the amenity buyer: the biggest issue has been the lack of property to buy.”

Charles Dudgeon head of farm and estate sales in Scotland comments, “With continued demand and a decrease in supply, average values have remained firm.  We have seen widening divergence between the values of the best and the poorest arable land, with the former worth up to double the latter: the best arable acres can reach more than £8,000 per acre, whilst secondary arable may be nearer £4,000 per acre.

“Whilst Scottish buyers and local farmers are the most active in the market, there has been an increase in the number of viewers from south of the Border, attracted by the quality, scale and price of some of the farms which have been offered for sale this year.”

Useful Resources, Advice + Guides From TheAdvisory.co.uk:

> What Your House Sale And Move Will Cost

> How To Find Reputable Cash Home Buyers

> The Five Ways To Sell Property Successfully

> Property Valuation, Estate Agents And Lies