Affordability cloud is landords' silver lining

Its official - affordability in Britain is bad. Close observers of the UK housing market will, of course, know this isn't exactly a startling revelation. It is, after all, one of the prime factors to which the high house price inflation of recent years has been attributed.

What is happening, however, is that affordability is getting worse, even with the housing market slowdown. Figures from the Council of Mortgage Lenders last week showed that the combination of high prices, high interest rates and muted wage growth had combined to provide the worst affordability conditions in 15 years during October this year. A typical first-time buyer would have to fork out 20.6 per cent of their income to pay the mortgage, compared with 20.4 per cent in September. Even for home movers things were getting worse, the share of income being 17.6 per cent compared with 17.5 per cent a month earlier.

For potential home buyers, this is bad news, even if the interest rate situation has subsequently eased for those fortunate enough to have variable rate deals with the lenders that have decided to pass on the recent 0.25 per cent cut, a list which excludes Alliance & Leicester, HSBC and Northern Rock to name but three (the latter needing all the income it can get). However, affordability remains a problem which is unlikely to be resolved due to the lack of political will to ensure enough new homes are built, according to Paul Holmes, managing director of first-time buyer agency Firstrung.

Mr Holmes commented: "Without mass building of starter homes circa, with the repatriation needed after World War Two it's impossible to build ourselves out of the problem we have to create affordable housing."

Such an eventuality, he said, was unlikely as there was not the political will to follow up the pledges. Nor, he added, was there good reason to expect the developers to meet the targets: "We shouldn't lose sight and forget that governments do not build homes, builders build homes and in the current marketplace builders are not going to build homes unless they can do it profitably."

Thus it may be that this affordability problem is going to remain as intractable as some fear, all of which means that there remains a large demand for buy-to-let accommodation. A popular accusation has been that the industry has artificially stimulated demand for its own product by purchasing property which people would otherwise have become homeowner residents in.

But at present, many will also be glad to have the opportunity to live in rented accommodation while they assess the state of the housing market, some perhaps doing so in the hope that they can wait for a downturn and find an affordable house after all in a few month's time. Those who do so will in the meantime provide a good income for landlords.

In today's world Property investment is an excellent investment option especially investment in UK

Jim Barnaby is a real estate investment broker and successful property investment adviser delivering research and selected UK and overseas property investment solutions with experience in spanish properties, french property investment, German property, Cyprus holiday homes, Property in Cape Verde, German property investment, cape verde property buy to let property