As we saw in 2010, markets don’t like uncertainty.

Moving into 2011, with public sector cuts looming and tax rises coming, there are reasons for concern. However, unlike other years we have entered with caution, 2011 shows applicant levels remaining very healthy in the mid and top tiers of the market. The key question is: will vendors be realistic on price?

The lack of credit remains the biggest issue for the residential market and whilst interest rates are unlikely to change at least until later in the year, tax rises will kick in.

Against this background, our key predictions are:-

For the south of the country, Mark Jamieson, Head of National Sales in the London head office comments:

South East England will outperform the rest of the country. London will continue to be the driving engine with wealth continuing to emanate out into the Home Counties (especially in the £1 to 3 million pound property bracket). There will never be a better time to sell in the Home Counties.

The bottom end of the market will remain tough, with a continued lack of credit. Jamieson adds: "Despite interest rates remaining low, the lack of first time buyers stimulating the bottom of the market will result in a mid-top end market that will have to become self sufficient".

The mid-market will outperform the top end, with a two-tier market becoming more prevalent between best-in-class and the rest. We describe this market as "middle lane and hard shoulder" - with little or no action in the fast lane. The private sector market will continue to grow in confidence and its recovery will gather pace following this year's positive year of consolidation whilst the public sector market will be relegated to the hard shoulder waiting for the rescue services with the hazard lights on. Jamieson comments: "the wider economic strategy with its growing disparities between the private and public sectors caused by stringent austerity budgets and a more aggressive fiscal policy will be reflected in growing divides both socially, and within the property market sectors: The haves and have-nots and the north/south divides (both geographically and by value)"

At the top end, the difficulty of matching purchaser and vendor aspiration will remain.

The lettings market will continue to show a shortage of stock and a consequent increase in rents.

We anticipate there will be an increase in sales for those that feel that they have to sell. They may well put their properties on at bullish prices to make the sale more 'palatable' but are likely to find that, after a period of stagnation, they may have to drop their prices. Further rebalancing may well end up with properties coming to the market at the beginning of 2012 at sensible re-corrected prices which is when the market will start trading more consistently again with supply and demand rebalanced.

"With hindsight", concludes Jamieson, "we may well identify a point in 2011 as the 'bottom of the market'. The key to the residential market is whether vendors will be realistic on price: if the answer is 'yes', then there is cause for optimism."

Further north, Mark Wiggin, Chairman of Strutt & Parker's Midlands region, adds his thoughts:

"It is impossible to be general in reference to the property market in 2011 as once again there will be hot and dead spots. These could even be a few miles away from each other.

"As a generalisation, I believe the market in the Midlands will fall between 5-10% but as usual, quality will always sell. We see no shortage in buyers - these were conspicuous by their absence back in 2008 but the number of people registering on our books as never been healthier - the question is whether vendors will be realistic and be prepared to sell at today's value i.e. the market value rather than their own value. I believe the Midlands market reflects 'real Britain'-not cushioned by the unreal London market.

"Middle market will be stronger than top end as the 50% tax band really kicks in and disposable income becomes harder to find! Big houses need considerable maintenance and therefore buyers will want to buy in their comfort zone. Life is becoming more expensive and property is one investment which could fall.

"Lending will remain an issue and we all will need to adjust our aspirations as to where the market place currently lies. In a nutshell, will there be a market for 2011? - yes. Will it be at current prices? - no" concludes Wiggin.