January update

January 1, 2006
by News on the Block Editorial Team

Halifax, Nationwide, Hometrack and Rightmove all indicated that the bottom of the market has passed in autumn 2005. Average house prices are forecast to rise by 1% during 2006 and by an average of 2.1% per annum over the next three years according to Hometrack’ s 2006 Housing Market Forecast. Low single digit house price inflation over

the next few years will

result in a steady

re-alignment of household incomes and house prices to more sustainable levels.

According to the New Homes Index, the proportion of apartments for sale in

the UK increased sharply in December 2005 to a new high of 57% of all new homes. The increasing dominance of apartments

in the new build sector is a direct result of government pressure relating to housing density guidelines and correlates with a drop in the average property price. Whilst all property categories experienced a reduction

in prices during last year, apartments and

semi-detached houses began to see a slight turnaround in the last quarter.

The 2006 buy to let market for landlords is looking positive according to research carried out by lenders. Property investors expect

to grow the size of their portfolios during the next

12 months from the current 11.8 to an average of

12.2 properties and while landlords will doubtless remain cautious through the year, they will continue to build their portfolios and benefit from attractive

long-term returns.

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