The biggest risk to the industry in 2013 is seen as a weakening world economy (see Graph 6). In fact, respondents see global forces
as more significant than the domestic economy. With global investment pivotal to the success of the London market in particular, continued eurozone uncertainty and broader global economic woes are having impact.
‘Lack of finance’ has dropped to 2nd place in the risk table, but is still seen as a very major risk. This is followed by domestic constraints around disposable income, the UK economy and the availability of mortgages. At the other end of the spectrum, interest rate rises are simply no longer seen as significant.
While many respondents expect a continuation of current trends and conditions in the residential industry, the acknowledgement that the global economy is the biggest risk factor suggests that a big external event could mean all bets are off. Is the industry well enough equipped and resilient enough to withstand another global shock? 2013 would seem to be a very good year to stick to the fundamentals. It will not be a good time to over-pay for land or other assets.