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Buy-to-let market to avoid slump in 2008

Tuesday, 4 December 2007 12:00 AM

Despite fears of a slowdown in the wider property market, the buy-to-let sector will remain strong during 2008.

That is according to predictions released by buy-to-let investment specialists Property for Life, which forecast prices in the wider market will be static for the first-half of the year, increasing by a maximum of three per cent in the following six months.

"As a result of this and the lingering aftermath of the credit crunch, we expect to see some slight dips in activity levels and demand as newer investors hold back until they are more certain about the state of the housing market," said David Austin, managing director of Property for Life.

This trend is based on the assumption the Bank of England will cut the base rate three times, returning to a level of five per cent, during 2008.

Conditions in the buy-to-let sector, however, will remain buoyant throughout the year.

"However, activity levels among serious investors will continue to be high throughout 2008, particularly as better investment opportunities re-emerge and buyers focus on the solid longer term returns of bricks and mortar," said Mr Austin.

"Demand for properties will be as strong as ever, buoyed by the growing demand from students, immigrants and those who prefer to rent as a lifestyle choice. With the private rented sector also increasingly taking up the slack on social housing, the future of the sector looks bright."

Several key hotspots are also developing in the market, providing potential for long-term capital appreciation and increasing rental yields.

"We are tipping towns along the M4 corridor, growing university towns such as Southampton and major regeneration areas such as Middlesborough as property investment hotspots for 2008," continued Mr Austin.

"The development and regeneration in these areas and the jobs and opportunities they are creating will draw people inwards, providing some extremely lucrative prospects for the buy-to-let investor," he concluded.

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