Assetz® News - Investment in property 'sees confidence return'

Investment in property 'sees confidence return'

29th June 2009 |

There is a saying that the greatest dark comes before the dawn. Those looking at the twilight midsummer sky in the small hours may differ, but in the economy and property market it appears this may indeed be the case. From the plunging gross domestic product of the last quarter of 2008 and the first this year, it appears the recession might have bottomed out.

But if the current situation is indeed the start of a new dawn and not a false one, this is not the same as saying a bright sunny day is imminent, with plenty of clouds - such as a continued lack of credit and unemployment - hovering around.

Nonetheless, the early signs of a possible recovery have been seen in the property market in terms of buyer interest, sales and mortgages. The last of these was revealed again today by the Bank of England, with the number of loans agreed for house purchases in May standing at 43,414, up from the 43,191 recorded in April. The aggregate value of such loans rose as well, from £5.1 billion to £5.4 billion.

For buy-to-let investors, confidence as a whole might be expected to gain from this and there has been positive news here of late via the Young Group index of buy-to-let investors, in which the survey recorded a second successive quarterly rise in sentiment, as more people said they were considering buying property and an increasing number thought prices would either be the same or higher in 12 months time. Such growing positive expectations were true both when it came to investing in London property and for buy-to-let elsewhere in the UK.

Commenting on the situation, editor at Property Investor News Richard Bowser noted the change that has taken place, stating: "[In] the first part of the year - January to March - there was a market in a state of flux with lots of fear, uncertainty and doubt - following on from the previous three months post-Lehman [Brothers' bankruptcy] in September of last year. In the last couple of months we are seeing evidence - anecdotal - of green shoots of confidence and potential green shoots of recovery in the economy."

He noted that while there has been an increase in rental supply thanks to the rise of the accidental landlord, there has also been a growth in demand, though he added the caveat that this is "location specific" and not applicable in all places.

On the question of finance, Mr Bowser acknowledged that at present credit supply remains an issue, meaning it is those who are "cash rich" who are in the best position.

This group, he noted, "are able to cherry pick the very best deals, they are able to negotiate very hard-balled discounts and they are selectively buying stock for the medium to long term".

So it seems that while the new dawn still provides gloom for some, for others the sun is shining bright. Those with the means to make long term investments now may find themselves enjoying the benefits as things continue to warm up.

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