Many people feel like - "if I hear one more commentator say it's a mixed bag I am going to shoot him/her and then myself", but there is no other way to describe it. In fact it is so mixed that one can easily find enough evidence to support the theory of a strengthening recovery in UK housing or a weakening one.
For example: RICS has reported a marginal rise in new residential buyers for the last 2 consecutive months, and this is now backed up by house builder Taylor Wimpey, which has today revealed that after 2011 "exceeded expectations" it has likely already hit its target of increasing operating profits into double digits, a target set for this year.
The presence of more buyers is also supported by the gradual but continued growth in mortgage approvals. According to the latest report from the British Bankers Association, approvals fell slightly from 35,196 in October 2011 to 34,738 in November, but this was still higher than the 6 months average of 33,509 - creeping up.
So, it does indeed look like the residential recovery is strengthening, however with unemployment still soaring, house prices still too high in many places and the mortgage market still constricted, most people concur that buy to let investors are behind the current strength, not healthy first time buyers etc.
On the commercial side, IPD has just reported strong returns for 2011. According to the latest release of its monthly property index, commercial property across all sectors returned 8.1% in 2011. The office sector was the best performing with 9.3% returns according to the index, followed by industrial with 7.6% and retail with 7.2%. These are good returns, but they still represent a significant slowdown in returns compared to last year, when IPD shows UK commercial property returned 14.5%.
However compared to property equities and equities, which lost 8.8% and 3.5% over the year according to IPD using data from the FTSE, property is still doing well. In fact bonds were the only investment to outperform commercial property with returns of 15.6% in 2011.
The returns for 2011 as a whole was good considering the worsening Euro crisis and the hit taken as the US lost its triple AAA rating earlier in the year, but the IPD data also showed a worrying trend towards the end of 2011. According to their data capital values fell slightly in November and December, which is worrying going into a new year. Phil Tily, Managing Director of IPD UK and Ireland said:
"Hopes were high at the beginning of 2011 - sectors such as shopping centres and City offices were expected to perform well - and by mid-year, talk was about a recovery in the secondary sector. However, the worsening situation in 2011 has seen expectations cut, and 2012 may be a year of re-evaluation in regards to pricing levels, and a heavy concentration on income."
Overall one could evaluate 2011 as a year in which the residential sector was able to strengthen its footing, while the commercial sector managed to tread water. But in the words of a famous song, in 2012 it's: "Let's go round again". Europe is still crumbling, the US still can't get its act together, and we have our own share of very difficult problems to overcome. But at the same time we have glimmers of hope, like student property returns and prime residential prices both about doubling in London last year according to different indices. So, strap yourself in for another year.
