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Falling House Building Starts and Rising Rents is Good News For Those Who Buy Today says Lawrenson of LettingFocus.com

Just today, we have seen the most pessimistic RICS survey of the housing market ever.
The new Royal Institution of Chartered Surveyors’ (RICS) study found that the market is in its worst state for 30 years after a record number of estate agents reported falling property prices.
RICS said 82 per cent of estate agents in the UK had seen a drop in prices since the start of the year, with just one per cent reporting a rise. The ratio is the worst since records began in 1978, and means that the housing slump is even more widespread than during the crash of the early 1990s.
From reading these figures, it is my view that we are some still way off the bottom, possibly as much as 18 months off (though how far away the bottom is will depend upon on what other skeletons the banks have in the closet that they haven’t “discovered” or owned up to yet) This will all determine how long the resulting dearth of credit will last.
However, I would urge you to look at what is happening in your local area very carefully as it may differ very much from this national picture. As professional investors know, not all areas are the same. Some offer potential and some offer a potential to lose a lot of money.
Meanwhile, rents are rocketing outside the oversupplied new build buy to let ghettoes
I have just successfully pushed through some chunky rent increases on my own buy to lets.
In some parts of south east London where I have a few properties rents are up by well over 15%, but I have kept my increases some way below that because my tenants have been with me a while and I value that commitment from them plus I know I can trust them to pay the rent and look after my properties.

Fal In New Building Starts
At the same time as house prices have fallen, the lack of house buyers has resulted in a big fall in house building starts which are down 10% on a year ago. These figures are likely to get worse still as house builders twiddle their thumbs waiting for someone to come into their show homes, if only for a chat about what was on Corrie last night.
It all means that when the credit freeze finally unfreezes and the lenders start falling over themselves to lend all over again, there is going to be an even greater shortage of property that the new mortgage money will be chasing and when that happens prices will I think really take off fast.
So my simple message is this: It is hard to call the actual bottom of the housing market.
So look around you, make cheeky offers on property purchases and once you have the property you can enjoy strong rental growth. The capital growth may have to wait, but it will come and when it comes, it will come fast.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson a buy to let and landlord expert from lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 2 years has been the UK’s top selling property title: buy the UK's top selling property investment book
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value. I’m an expert property investment speaker and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and I can provide advice for landlords
Check out where I was recently featured in the Daily Telegraph:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/24/cmbuy24.xml&page=1
http://propertyclub.telegraph.co.uk/Page/View/222
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property investors networking programme at my website.What’s unique about lettingfocus.com is that we offer independent property coaching because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.

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