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Investor confidence returns to buy-to-let market

London remains the preferred location for investors; 52% are considering buying additional property in the capital – an increase of 12% on the previous quarter (although still 8% down on Q2 2008).

The trend is not only confined to London, with 30% of investors considering adding UK assets outside of the capital to their portfolios – compared to 24% in the Q1 this year.

The outlook for property prices shows a similar trend, with investors becoming increasingly positive; increasing numbers predict that prices will stabilise and/or rise over the next twelve months.

57% of investors believe that London prices will be at current levels or higher by this time next year (an increase from 49% in the previous quarter and up from a low of 36% in Q4 2008) and 42% expect the same to be true of UK property outside London (up from 24% in Q1 2009).

Neil Young, CEO – Young Group, warns: “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.

Neil Young continues, “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.”

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