For a long time it’s been almost impossible to open a newspaper without seeing a headline talking about the doom and gloom in the housing market.

Falling house prices, banks refusing to lend money, negative equity. You know the stories I mean. However, amid the gloom in the market, there’s now real evidence that the worst is over and that the market is picking up.

If you don’t believe me, take a look at our monthly survey of the National Association of Estate Agents: it found that the average branch had 299 house hunters on its books in May, up from 265 the previous month and 247 in May 2008.

What’s more, there are strong signs that parents are taking advantage of lower high prices to buy a home for their children. According to research for our property website PropertyLive.co.uk, it now makes financial sense for the so-called Bank of Mum and Dad to pay for a two-bedroom flat rather than the usual one-bed property.

Why? Because the research found that in 17 out of 20 university towns and cities, including Birmingham, Exeter, Leeds, Liverpool, Reading and Sheffield, the annual income earned from letting the second bedroom in a two-bedroom flat more than outweighed the additional mortgage repayments. The calculations assume the buyer has a 15 per cent cash deposit and a three year fixed-rate repayment mortgage at 5.87 per cent.

For example, on average a one-bedroom flat in Leeds costs £95,000 while a two-bedroom flat costs £137,000. Typical rent for a room in Leeds is £3,678 a year. With the difference in annual mortgage payments between the one and two-bedroom properties being £2,713, this gives a nice profit of £965 a year.

You can read more about the research in The Mail on Sunday, which ran an article featuring NFoPP member Ashley Jacobs and his daughter, Danielle.


Tags: , , ,