But the medium-term effects of this increase could be less positive. A rise in average prices is seen by many as an indication that the housing market is beginning to ease. A more fluid market, along with the government’s newly pledged help for first-time buyers, could mean a significant reduction in demand for rental properties.
At the same time, higher prices will make it more difficult for investors to expand their portfolios – particularly if depressed rental demand has already reduced their existing income. This was reflected in the survey results, which suggest that just 28 per cent of landlords expect to purchase a new property within the next 12 months.
But it is not all gloom for landlords. Housing stock remains very low, and some analysts believe that this could lead to the creation of a new property bubble. This would price many buyers out of the market, meaning that a larger number would be forced to rent.
The survey also shows that almost 80 per cent of landlords are optimistic about their prospects for the coming year. But many are concerned about the medium-term effects of rising interest rates and new government help for first-time buyers
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