Strong 2007 investment market predicted to continue

A new study from Paragon Mortgages indicates that 2007 will be seen as a year characterised by stable yields, record rents and strong growth in annual returns.

A regional breakdown shows that the strongest total returns were in London, the East Midlands and the South-West.

As an indication of the strength of the market in 2007, annual returns amounted to 21%. Yields remained stable at 6% for the 20th consecutive month.

Paragon anticipates that the proportion of the population living in rented homes will grow. Expansion in the rented sector will be driven by the forecast rises in the UK population. The Office of National Statistics has estimated that between 85 million and 108 million people could be living in the UK by 2081.

Demand for properties will be strong, buoyed by the growing demand from students, immigrants and those who prefer to rent as a lifestyle choice.

Earlier in December, Property for Life, a UK-based property investment consultancy that specialises in helping property investors create a wealth building property portfolio, reported that the buy-to-let market has had a strong year, remaining buoyant despite slowing house prices and financial turbulence.

It predicts that this will continue into 2008, encouraged by further drops in the Bank of England base rate.

Property for Life anticipates that activity levels among serious investors will continue to be high throughout 2008, particularly as better investment opportunities re-emerge and buyers focus on the solid longer term returns of bricks and mortar.