Many investors entering UK buy to let market as a result of stability and rising rent levels
An analysis of data from the leading house price indices shows that UK property prices fell slightly in the third quarter of 2011, but are down only 0.7% in the last 12 months.
The average price in September was £197,531, which is an increase of £2,101 since the start of the year, the analysis from House Price Watch shows.
It is based on details from the CLG, LSL, Acadametrics, Halifax, Nationwide and Rightmove indices and claims to give a more accurate and less volatile picture of house price trends.
The annualised average rate of growth for September stands at 0.9% with the three and six month annualised rates of growth showing -2.6% and -0.3% respectively.
‘Several of the indices reported sharp price falls in August which has had the effect of bringing down price growth in the third quarter. Nonetheless, prices are down only 0.7% annually and up 1% since January and we still expect to record positive growth for 2011,’ said Stuart Law, chief executive of Assetz.
‘However, there is a possibility that prices could fall back further given that we are seeing a very stable market overall with small changes both up and down. Our previous prediction of 5% growth this year is no longer tenable given the limited progress made in the first three quarters, due to the impact of the Government’s austerity measures and the ongoing Eurozone crisis. Unemployment, however, has not impacted on growth to the extent that was expected by many commentators as it remains at a level well below that forecast,’ he explained.
‘The recent decision by the MPC to inject £75 billion into the economy and the Bank of England’s belief that inflation will fall back over the medium term, minimising the risk of interest rate rises, is good news for property buyers and investors.
‘Savers who are staring into the abyss in terms of returns from bank accounts are increasingly likely to turn to more stable investments, such as buy to let, which is generating a solid cash flow for investors as rents continue to rise to record levels. This continued flight of capital into bricks and mortar will underpin long term house price growth with prices expected to remain flat in 2012,’ he continued.
‘We continue to see huge numbers of income starved investors entering the UK buy to let market for the first time, attracted by its stability and surety of income,’ he added.