Assetz® News - Property investors buoyed by rising prices

Property investors buoyed by rising prices

12th June 2006 |

After recent reports of weakening house price inflation, the Department for Communities and Local Government (DCLG) has restored some confidence with yet another encouraging report.

It would appear from the new statistics that property investment in the UK remains a solid option, with several regions seeing exceptional price rises during the year.

Annual house price inflation in the UK as a whole in April stood at 5.1 per cent, which was up from 3.3 per cent in March. It is an increase that represents the continuation of a remarkable period for the UK property market and it indicates that confidence has remained high.

Property investors will be similarly encouraged by the fact that prices increased by a sturdy 0.9 per cent between March and April, which compares to a fall of 0.8 per cent between the same two months last year.

The DCLG indicates that the price rise was driven primarily by significant increases for terraced houses and semi-detached properties, which saw prices climbing by two per cent and 1.1 per cent respectively.

Those looking to purchase investment properties in England will be hugely encouraged by the fact that house price inflation rose in all regions in April.

An area that has enjoyed a sustained period of growth in the property market is Yorkshire and the Humber and annual house price inflation of 8.9 per cent in April means it was yet again England's best performing region. Capital appreciation will also have been impressive for those investing in London, which saw growth of 7.1 per cent in the year.

Looking further afield, however, the inflation rate in Northern Ireland increased from 14.1 per cent in March to 15.8 per cent in April and there is no doubt that investors in Northern Ireland are enjoying a particularly dynamic period. With a series of commercial property investment opportunities now opening up in Belfast in particular, it is certainly proving popular with those seeking both capital appreciation and rental yields.

The buy-to-let sector has also been strong in Belfast and the city was recently picked out by UCB Home Loans as a buy-to-let hotspot thanks to a solid influx of overseas workers.

While house price inflation is clearly the major concern for property investors, the vast majority will also be governed by the initial purchase price and there is still huge variation in this respect throughout the UK.

The new figures suggest that the mix-adjusted average house price in April was £196,943 in England, while in Scotland it was just £132,201. Those looking to buy in Wales can expect to fork out £151,226 and those scouring Northern Ireland instead will be looking at a figure of £142,475.

The Royal Institution of Chartered Surveyors (Rics) has observed that the strong house price increases in London are a reflection of "the buoyancy of the financial and business sector in the capital". One concern would be that recent stock market volatility could potentially have a cooling effect if it is sustained.

Nonetheless, Rics has observed that demand for property remains strong, with activity levels still above the historical average.