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The UK housing market has hardly had the most impressive 2012, with property prices continuing to fall across the country and affordability being something dreams are made of. But what will happen in 2013?

What happened in 2012?

Trying to own a home in 2012 did actually get off to a good start as the stamp duty holiday was relaxed until the end of March. This meant that buyers hoping to snap up a property under £250,000 were able to do so without paying anything towards stamp duty.

So naturally, this sent a flurry of buyers to the market stirring up a bit of activity in the first quarter.

Despite this, it was not enoughto keep the momentum going. Housing is expensive and raising a deposit for one is even more of a challenge than trying to get a mortgage approval.

Banks began to relax slightly, but the deepening crisis in Eurozone and the emergence of the Libor scandal caused them to become tighter with their lending.

To make matters worse, wannabe buyers were facing some of the highest rental rates on record leading to an ongoing housing crisis. As a result, the government has been called into action and forced to step into the situation.

For example, it announced plans to introduce heavier discounts to the Right-to-Buy scheme which allows people to purchase the property they are living in. The reform which was proposed by housing minister, Grant Shapps, is designed to make it easier for two million people living in social housing.

Housing Minister Grant Shapps said; “The builders had stopped building, and millions of hard-working, aspiring home owners were blocked from taking their first step on the property ladder.

“This is especially true for people living in social housing. The previous miserly restrictions on discounts meant Right to Buy became, for many tenants, nothing more than an empty promise – a social mobility scheme run by Ebenezer Scrooge.”

Last year only 3,700 sales were made compared to the peak of 84,000 less than 10 years ago. Now the government is introducing a nationwide cap of £50,000 which is actually treble the current discount in some parts of the country.

In addition to this the government has announced plans to extend the Support for Mortgage Interest (SMI) scheme until March 2015. The scheme means as a homeowner you are able to get certain income related benefits, making ownership more affordable. This is normally paid directly to your lender and you can’t get help towards the amount you borrowed, only the interest you have to pay.

CML director general Paul Smee commented on the announcement made in the annual Autumn Statement: “These had been due to expire in January 2013 but [the] announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify.”

Whilst headline figures show house prices continuously falling, figures from the Office for National Statistics (ONS) show that on average UK house prices are rising.

The latest monthly survey shows that prices increased by 0.2% in October, leaving them 1.5% higher than one year ago. This leaves the average home in the UK costing £231,000.

This contradicts both the Halifax and Nationwide surveys which both claim house prices have fallen slightly in the last year.  All the surveys suggest that property prices in London and the South East are rising, and the ONS research also suggests that prices across the UK are still higher than a year ago, excluding London and the South East.

“House prices continue to remain relatively stable across most of the UK, although prices in London are increasing and prices in Northern Ireland are falling,” the ONS said.

“The year-on-year increase reflected growth of 1.8% in England and 2.8% in Wales, which were offset by a decline of 2.2% in Scotland and 11.7% in Northern Ireland.”

Whilst this is all very promising, what will happen in 2013?

Further studies show that one in four buyers believe it will take them at least a decade to raise enough cash for a deposit.

A recent report from the Building Societies Association (BSA) showed that the view of the market remains pessimistic.

Despite a 34% rise in lending in the mutual sector, buyers are still adamant that they cannot afford to own a home in this economic climate.

The 2013 housing market forecast is a similar picture to that of 2012. Economic recovery is not happening anytime soon and with that on the cards, the housing market is likely to continue suffering.

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