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Supply Increases to Push Down Prices, Increase Property Investments

November 1, 2010Article by Ray Withers

Property investments in the UK could increase as increasing supply begins to put fresh downward pressure on prices, international property investment consultancy Property Frontiers has announced. The firm believes that the future holds price falls, because the problem of record weak supply levels, which supported the price rises throughout the last 18 months is over.”

Director of the firm David Cox said:

“The latest release of the Royal Institute of Chartered Surveyors’ UK Housing Market survey showed further evidence that UK housing supply is increasing at an accelerating rate. The survey found that 22% of surveyors are now seeing instructions increasing, up from 12 percent in August.

“Rightmove’s latest index disagrees however. According to it September saw 26,000 homes per week go up for sale on average, down from a high of over 30,000 and the lowest since April according to the release.

“While this seems significant, the latest data from the British Bankers Association shows that mortgage approvals continue to fall, with just 31,767 approved in April down from 34,219 in July. 26,000 homes per week adds up to 112,666 per month, you do the math.”

The Rightmove index mentioned by Cox also tells us that asking prices have already fallen by over 3% in the last 3 months. The Halifax index for September shows an incredible 3.6% fall over the month, however, the 3 monthly measure, which is regarded as more accurate showed a fall of 0.9% compared to the previous 3 months.

Price falls, at a time when the wider economy seems to be recovering slowly, and at a time when residential rents are doing extremely well, could easily trigger a rise in property investments.

We also know that the government is to make yet more cut backs, and that it also plans to cut millions of jobs from the public sector. This could well add into the mix desperate sellers and an influx of people looking for rented accommodation, a favourable combo indeed for buy to let property investors.

Property Frontiers are currently marketing a development of genuine buy to let investment opportunities in the UK priced at £50,000. The product is aimed solely at investors; set to achieve gross rental yields of 7% to 10%. The firm is also marketing some excellent student investment products in Liverpool. With the UK population growing and emerging markets set to lead global economic growth, British universities are set to see a massive increase in students from home and abroad, adding to demand for student accommodation, which is already in short supply.

For more information contact Property Frontiers on +44 (0) 1865 202700.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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