Market affected by confidence…
In a market that is hugely affected by confidence, this new information provides evidence that investors are looking beyond the current issues in the housing market, which are fuelled by a lack of liquidity in the economy, and focusing more on the fundamentals of the UK property market which remain strong.
Despite the recent fall in housing prices, there are plenty of buyers looking to purchase property, the single most limiting factor has been the lack of available mortgage products. The demand for mortgages remains high but the supply has been restricted. Recent Bank of England interest rate cuts have barely had an impact on the Libor rate and even less of the savings have been passed on by the lender to the consumer.
Demand for property remains high…
The demand in property remains high but the supply of properties available will decline as the number of properties being completed by developers falls by 20% to 33,299 according to the latest NHBC figures. Gordon Browns target of building 2 million new homes by 2016 seem highly unlikely if the trend continues.
Investors who understand the market…
Participants of the survey ranged from professional investors with multimillion pound portfolios who have been investing for years to the novice investor with 1 buy to let residential property. Many of those surveyed have been investing for years and understand the market and expect to see an increase in property prices in the next five years. They continue to see residential property investment as a viable source of income for the future and expect to see a return over the long term as apposed to the short term.
Lenders confidence…
A price increase in the next five years will largely depend on the lenders regaining confidence and offering better mortgage products with suitable rates. An increase in lending will eventually lead to an increase in property price. With the Bank of England interest rates expected to be cut further it may just be a matter of months before we start to see the desired changes in mortgage products.
