Buy To Let Housing Market

The Buy to Let Housing market has grown in size and importance in recent years. The rapid growth in house prices have provided excellent returns for investors. However, there is concern that the boom period of the buy to let housing market is now over and 2008 could witness falling prices.

Buy to Let Housing Market in 2008

• House prices may start falling. See: Reasons house prices may fall.
• Interest rates are forecast to fall – Bank of England forecast interest rate cuts
• Despite dire forecasts of falling house prices. Many argue there are still good prospects for the buy to let sector. This is mainly due to rising cost of rents. – Buy To Let helps stabilise the market
• There has been a remarkable growth in buy to let mortgages in the past 8 years. Last year saw a 60 per cent increase in the number of buy to let mortgages from 44,000 to 69,000, in 2007
• A key issues is the extent of volatility in the buy to let sector. Some suggest buy to let investors will panic at the sign of falling house prices and look to cash in their gains at the top of the market. However, others argue that buy to let investors are often in the business for the long term. Capital growth is only one aspect of buy to let. The main criteria for buy to let investors is rent able income against mortgage payments and costs. Buy to let could threaten house prices
• Buy to Let specialist Paragon has issued a severe profits warning – see mortgage news

• Are UK House prices set to fall?
• UK Housing Market