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Buy to Let Sector Shows ConfidenceConfidence in the buy to let market is normally drive by 2 main factors that being interest rates and employment. Obviously supply and demand of housing stock has a bearing but is not the most critical factor in landlords confidence.
In todays market however as immigration increase and traditional family structures are broken up the pressures on the housing market conffidence is increased by the lack of supply and over demand of housing stock. There has been spectacular increase in house price growth over the past 5 years which has been fueled by buy to let investors. Unfortunately many younger members of our society have been squeezed out of the housing market.
Retail sales are one of the best indicators of consumer confidence and the recent heavy discounting in Decmeber and hjanuary sale shows that confidence is lower than previous years. Many families have low saving levels and reasonable debt over and aboce a mortgage if they own a house. The addition of HIPS into the housing market has also led to a lower consumer confidence in that many consumers do not want the upfront payment hassle when selling a house so they just won't put their house on the market.
In contrast Buy to let mortgage investors are contrary in outlook. With reposessions increasing many of these investors will certainly see this as a buying opportunity. Fundemetally though whilst prices may go down a bit the underlying supply and demand issue mean a crash is unlikely.
1 February 08
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