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News: Credit crunch? What credit crunch?

Fri, 30 Nov 07

Contrary to accepted opinion, the future is bright for BTL, according to Zone 4 property...

Over the past 10 years, property prices in the UK have sky rocketed and this has tempted many people to invest in property. However over the past year, the property market has slowly cooled with interest rate rises
kicking in and the recent global credit crunch leading to many people and journalists predicting that the bubble has finally burst for the buy to let and the property market. However, we beg to differ....

We think that the UK property market is going to see a lot of good growth over the next 10 years and here is why. In the next decade, the UK’s population will have increased to 65 million people and by 2031 this figure
will have leaped to 70 million which will dramatically increase the demand for housing.

It also seems unlikely that the extra housing demand is likely to be met with a lack of suitable brown field sites available to property developers and a notoriously slow planning system meaning that not enough housing can be built quick enough to accommodate the expected future growth in the UK population.

Extra demand will fuel price rises

This extra demand for housing will mean that property prices will continue to rise steadily over the next 10 years and beyond simply because demand for property is far greater than the current supply. If you also add in other factors such as a strong and buoyant economy, London hosting the Olympics in 2012 and becoming the global financial capital, interest rates potentially falling in 2008, then the factors for future growth look good.

The only way property prices will stop or fall sharply is if interest rates sky rocket as they did in the late eighties, more homes can be built to meet the demand for housing, or if there was a major UK or global
catastrophe. Otherwise we fully expect good growth in the property market to continue for at least the next decade.

Another very positive factor is that rental demand in the private sector is at a five year high. According to a recent report published by ARLA, the rental market is booming and they say this is due to the many competing demands for rented accommodation and also the ‘softening’ in current property prices. Softening in the sales market is always a driver of further demand in the rental market.

We personally believe that the private lettings market will only become more buoyant in the future as first time buyers struggle to get onto the housing ladder, which will be exasperated by lenders tightening their
lending requirements and a mass influx of eastern Europeans all pointing to an increasingly buoyant rental market certainly for the foreseeable future.

FTB difficulty will increase

Grant Delmege who launched Zone 4 Property said; “The UK property market is essentially driven by supply and demand and with the population set to dramatically increase over the next 10 years property prices look set to increase as long as the economy remains stable and interest rates stay low”

He also added that “It is going to become more and more difficult for first time buyers to get onto the property ladder in the future as property prices increase further and lenders tighten their belts. However, one
persons problem is another persons joy and if first time buyers cannot buy they will rent which is excellent news for landlords and property investors”

In summary, we expect to see good continual growth in both the property and rental market in the UK certainly for the next decade. And we could potentially see another ‘golden decade’ of property price growth meaning the prospects for the buy to let market are very positive indeed.

for more information http://www.zone4property.co.uk

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