Buy-to-let investors maintain positive sentiment

Research by the Young Group has revealed increasing numbers of buy-to-let investors are keen to return to the market as they believe property prices will stabilise and rise during the next 12 months.

Results from its Q2 2009 survey of investor market sentiment show that increasing numbers of residential property investors are considering purchasing additional UK properties within the next 12 months.

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. Almost three-fifths 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, chief executive of the Young Group, said: “Making predictions is something that theYoung 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.

“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 research shows that there is appetite to invest in the sector, but it’s now a question of whether mortgage lenders will match the demand.”