Buy to Let property investors accentuate the positive
Added 26.06.09
Increasing numbers of Buy to Let investors are keen to return to the market as they believe property prices will stabilise and rise during the next 12 months, according to the latest Index results from the Young Group.
Young Index is a quarterly gauge of market sentiment within the Buy to Let sector. It polls Young Group’s client base of around 500 active investors who hold UK investment property.
The results from the Q2 2009 survey of investor market sentiment show that increasing numbers of residential property investors are considering purchasing additional UK properties within the next 12 months.
London remains the preferred location for investors with 52 percent considering buying additional property in the capital. This is an increase of 12 percent on the previous quarter, although still 8 percent down on Q2 2008.
The trend is not only confined to London, with 30 percent of investors considering adding UK assets outside of the capital to their portfolios, compared to 24 percent in the Q1 this year.
The outlook for property prices shows a similar trend, with investors becoming more positive. An increasing number predict that prices will stabilise and/or rise over the next 12 months.
57 percent of investors believe that London prices will be at current levels or higher by this time next year, an increase from 49 percent in the previous quarter and up from a low of 36 percent in Q4 2008. 42 percent expect the same to be true of UK property outside London, up from 24 percent in Q1 2009.
Neil Young, CEO at Young Group, warned: “Making predictions is something that Young Group never likes to do, but this is the second quarter in which we’ve witnessed an increasingly positive sentiment for the Young Index data.
“The trend continues to move in an upward direction and demonstrates a positivity and willingness of private investors to increase their holdings of residential property. It remains to be seen if this burgeoning demand will translate into purchases or whether the languishing mortgage market kills the prospect of a relatively smooth return to house price stability and growth.”
The private rented sector plays a valuable role in providing housing, demonstrated by the Government’s commitment to boosting the sector through the Homes and Communities Agency’s (HCA) Private Sector Rental Initiative (PRSI), but the sector is suffering because private investors still find it difficult to secure appropriate mortgage products.
Young continued: “Rented accommodation is of immense value to the community, offering flexibility and choice. Currently, individual private investors are being prevented from investing in the sector by lenders’ imposing unfavourable mortgage terms. This quarter’s Young Index results show that there is appetite to invest in the sector, but it’s now a question of whether mortgage lenders will match the demand.”
84 percent of respondents to the survey expect the Bank of England base rate to have risen by this time next year, but expect it to remain below 1.5 percent. The average interest rate outlook for the next 12 months is 1.19 percent.
News feed courtesy of Residential Landlord