Residential Real Estate

The credit crunch and stringent mortgage environment notwithstanding, residential real estate investment has seen something of an upswing in March. The Rightmove property survey revealed that real estate investment is being tested at prices still remarkably close to the peak of last year's boom. In further good news for real estate investment ARLA Members Survey of the Buy to Let Sector Q1 2008 predicts the start of a new housing cycle.

After a long slump, residential real estate investment has experienced a fillip with prices rising for the second month running in March. The average asking price rose 0.8 pct between February and March. It is important to note that real estate investment prices have held since the bubble burst on the property boom. The average real estate investment price is just 1 pct lower than in October 2007 when prices peaked. While the on-going credit squeeze restricts property investment it also reduces the possibility over-supply. It has been seen that on an average investment property spends 82 days on the market – down from 93.

Real estate investment in the rentals market has also seen an upward trend. According to ARLA average rents went up by 4% for houses and 2% for flats. In its quarterly review, ARLA found that the number of letting agents that had more tenants than properties is at its highest level. ARLA suggests that these trends are the beginning of an upward swing of a buy-to-let real estate investment cycle. As the real estate investment market weakens and housing becomes less accessible, more people, especially first timers, will rent. This will in turn result in increased yields.

Buy-to-let real estate investment is also partly driven by immigration. 20% of residential investment properties let out by ARLA members were to immigrants. Getting references is easier now, however real estate investment will require more checks to ensure they get good covenant tenants.