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Insight & Opinion

Confident outlook for the UK’s residential investment property market

Author: Gemma

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Renewed confidence in the UK’s residential investment property market has led to investors purchasing property in the hope of achieving strong rental returns and capital growth.

Following a period of substantial growth, property prices have stabilised according to Nationwide. In October house prices increased by 0.5% however for the second consecutive month annual price growth remained flat, only recording 9% growth.

Property experts forecast that property values may increase again next year following this period of stabilisation. Investors who purchase property while the market is stabilised may benefit from future price rises.

Rise in buy-to-let lending

A rise in tenant demand and record returns from buy-to-let investment property has led to increased mortgage activity among those looking to profit from this buoyant market.

According to Paragon Mortgages, Q4 2014 will end with a 6% quarter-on-quarter rise in activity. It is thought that over the next 12 months buy-to-let mortgage activity will remain stable, with a 3% increase in activity predicted throughout the year.

Investor confidence grows

A continuous demand for rental properties has propelled rental prices to new highs, enabling investors to receive some of the best yields on the market.
The latest data from the Office for National Statistics shows that the average cost of renting has increased by 1% over the 12 months to the end of September 2014.

Suggesting a much steeper increase, Homelet’s latest findings show that the average UK rental payment increased by 8.2% in the 12 months to August, with the average cost of renting peaking at £921 a month.

According to Sequence, there are on average 7 tenants chasing each available rental property on the market.

This strong tenant demand suggests that rental returns are showing no signs of slowing down, with more investors looking to capitalise on this flourishing market.

With investors holding a ‘confident’ outlook on the UK’s residential investment property market, buy-to-let investment could hold the key to unlocking some of the best returns on the market.

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