Property Investment Returns as Confidence Grows

Profit in property has taken a hammering thanks to the stringent economic conditions, but property investment is returning as figures show that confidence is back. Deterioration in property values is thought to have sparked investor interest.

According to reports, the UK is experiencing an increase in buying as investors look to exploit the slide in property prices; pointing to growing investor confidence as the economy shows signs of recovery. The Association of Real Estate Funds (AREF) said they had witnessed a return to property investment. Others reported that net sales were positive and redemptions have slowed down significantly. But property investment is on the up as the market has showed signs of stabilisation.

Deterioration in property values is thought to have increased investor appetite as people look to purchase property amidst an ailing market. Despite predictions that investor confidence is growing, Lynda Shillaw, managing director of corporate real estate at Lloyds warned that property investment would remain only in pockets of the market. Areas like Central London have attracted interest from overseas investors looking for prime real estate at a reduced price.

Property Investment on the Up

Property investment opportunities are becoming clear to many investors who are swooping in on the many affordable and cut-price property deals that have presented themselves at property auctions across the country. Rising repossessions and slowing sales mean those who are in a strong position can afford to reap the benefits, snapping up property bargains.

According to Country Life magazine – a publication that focuses on premium property – the eventual recovery in property values is inevitable. Savills state that the UK is now in the first stages of recovery led by the prime property sector. It adds to the theory that there are more signals and signs indicating a return in property investment confidence with property prices rising by over 4% in central London. It's felt that prime property (the most expensive properties) will lead the recovery as these properties tend to be less influenced and limited by mortgage finance.

Economic Variables Could Create a Two Tier Market

Property investment could still be restricted to areas that are less vulnerable to unemployment and job insecurity, which some property experts believe could contribute to a two-tier market, with growth dependent on local markets and improved accessibility to mortgage finance. Analysts predict that although property investment will return, there could be big disparages between regions and property sectors because of the economic variables. It's thought that the property investors with low debts who entered the market when it was at its lowest and who therefore have more access to equity and more cash, will be the breed of property investors who could be the most successful players in the property market of the future.

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