We keep hearing about a double dip, and concerns over house values. I actually look at how resilient house prices in the UK are. Unemployment has increased by 50% over the last 3 years, credit has been slashed, and yet house prices are only down around 10% from their peak!

Why are house prices so resilient?

• Supply and Demand
• Shortage of New Properties being Built

The government outlined in 2006 how many houses they feel are required by 2031 - and currently nothing is yet being done to address the structural undersupply of new housing - we require 6 million additional homes by 2031 on current projections - and this will continue to support the case of longer-term price increases.

So demand is huge yet supply is not nearly enough. The number of properties being built in the UK has dropped to its lowest since the 1920s while the country is facing a shortfall of nearly a million homes, a trade body recently warned. “Only 142,000 new properties were built during 2009, the smallest number since 1923, excluding the years during World War Two,” the Home Builders Federation said.

Waiting lists for social housing are at their highest with over 4 million people in the UK on waiting lists currently. With the UK population expected to continue to grow by 400,000 per annum for the next 20 years, further pressure will be put on property.

The causes of the relentless increase over the recent centuries in the UK's population - now projected to pass 70 million within 25 years - are many and varied. They range from medical advances and growing individual prosperity to greater life expectancy and the waves of immigration.

This is such a strong story for investors buying property in the UK! Huge pressure on rents and upward pressure on values as credit improves. While credit is still not easy to come by, compared to this time last year there are more products, and loan to values have increased. We now have The Mortgage Works who have gone from 70% to 80% LTV, and several brand new lenders such as Aldermore offering good buy-to-let products, so there are certainly more options for investors again.

What direction will credit go?
Undoubtedly more lenders will come on the market - and I would expect in another year LTV for buy to let to improve further - with LTV on new build apartments most likely increasing to at least 70%, and at least one other lender offering 80% LTV.

There is no doubt home ownership is very much the culture in the UK - but the rental market is booming for investors. Residential property with reliable yields is becoming more and more attractive - with some big players that were concentrating on commercial investing, now realising the benefits of residential property, and banks are certainly happy to lend to them.

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I know one developer who has recently sold over 600 properties to one such group who were delighted with the 8% yields they are getting and the discounts giving them instant equity. I have seen some investors who bought a few properties at the peak, who are now making the most of the discounts and are buying a lot of properties, building up their equity levels again while others are sitting on their hands and not buying - make sure you are one of the investors making the most of the conditions! As an investment and making the most of current conditions, property is an excellent vehicle, as the Sunday Times Rich list shows us every year. This should give you excellent confidence, and knowing the demand for property and the issues with supply, gives me excellent confidence to keep buying as many buy-to-let properties as I can finance, following the rules below.

Aim for these basic rules:

• Only buy for buy-to-let where the rent you will receive is at least 125% of the mortgage payments at around 6% based on 75% interest only mortgage
• Aim for at least 15% discount on current RICS open values.
• If it is impossible to achieve this in your local area e.g. in your area the rents do not achieve this coverage then do not force it - find an area of the UK where you can achieve this - there are plenty of areas still offering excellent yields, giving positive cashflow.

You can contact one of our Portfolio Development Managers on 0115 9853963 or by emailing investments@propertysecrets.net to discuss investment opportunities, and make sure you take any negative newspaper headlines with a pinch of salt, the facts are, we need more houses in this country, the rental market is very healthy, and interest rates will stay low for the foreseeable future to provide stimulus to the economy!