Current and prospective buy-to-let investors alike will no doubt be interested in the contents of a report on the UK housing market that has been issued this week.
July 20, 2007 (Press Release) --
Current and prospective buy-to-let investors alike will no doubt be interested in the contents of a report on the UK housing market that has been issued this week. The report by HBOS - one of the 'big four' banks - looks at current house prices, analyses recent trends and attempts to make predictions on future housing market movements.
One of the more interesting features of the report, from an investment point of view, is the estimate that house price growth will top six per cent in 2007. This is actually a revision of a previous estimate made by the bank - four per cent - and reflects the considerably pronounced growth in house prices that was seen in the first quarter of this year.
HBOS says that the UK economy is strong, enjoying its 60th successive quarter of growth. As such, the housing market is "underpinned by sound fundamentals" including high levels of employment. However, at the same time it is noted that continually rising house prices will curb demand for properties as mortgage payments become more expensive.
Martin Ellis, chief economist for the bank, commented: "Whilst house price growth was stronger than expected during the early months of 2007, there are now more signs that the market is slowing. We expect this trend to continue. House price inflation should ease over the second half of the year."
This might seem like a mixed report, but it actually puts the buy-to-let investor in a good position. One the one hand, the housing market is not expected to crash, or even suffer any particularly heavy setbacks. This means that investments will continue to hold a high resale value.
At the same time, everybody is in work, everybody needs somewhere to live, but few can afford to buy a house at current prices. The fact that the Bank of England keeps raising interest rates - and is expected to do so again before the end of the year - only adds to the problems for prospective homebuyers.
This means that the buy-to-let investor with residential properties in the right areas could well make a killing. HBOS predicts that market forces are going to curb demand for houses, but prices are unlikely to come down by any significant amount.
A recent report from Hometrack concluded that around 70 per cent of people in rented accommodation are dependent on the lettings industry for a place to live. One of the authors of the report, Richard Donnell, felt that rental property is an essential feature of the modern landscape.
"Our analysis shows that the private rented market we have today has simply become an extension of the affordable housing sector," he said.
One of the more interesting features of the report, from an investment point of view, is the estimate that house price growth will top six per cent in 2007. This is actually a revision of a previous estimate made by the bank - four per cent - and reflects the considerably pronounced growth in house prices that was seen in the first quarter of this year.
HBOS says that the UK economy is strong, enjoying its 60th successive quarter of growth. As such, the housing market is "underpinned by sound fundamentals" including high levels of employment. However, at the same time it is noted that continually rising house prices will curb demand for properties as mortgage payments become more expensive.
Martin Ellis, chief economist for the bank, commented: "Whilst house price growth was stronger than expected during the early months of 2007, there are now more signs that the market is slowing. We expect this trend to continue. House price inflation should ease over the second half of the year."
This might seem like a mixed report, but it actually puts the buy-to-let investor in a good position. One the one hand, the housing market is not expected to crash, or even suffer any particularly heavy setbacks. This means that investments will continue to hold a high resale value.
At the same time, everybody is in work, everybody needs somewhere to live, but few can afford to buy a house at current prices. The fact that the Bank of England keeps raising interest rates - and is expected to do so again before the end of the year - only adds to the problems for prospective homebuyers.
This means that the buy-to-let investor with residential properties in the right areas could well make a killing. HBOS predicts that market forces are going to curb demand for houses, but prices are unlikely to come down by any significant amount.
A recent report from Hometrack concluded that around 70 per cent of people in rented accommodation are dependent on the lettings industry for a place to live. One of the authors of the report, Richard Donnell, felt that rental property is an essential feature of the modern landscape.
"Our analysis shows that the private rented market we have today has simply become an extension of the affordable housing sector," he said.
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