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Buy-to-let investors fuel new-build sales, says Ludlowthompson.com

The number of investors looking to invest in new build properties increased from 9% to 26% between September and March.

The London lettings agency's survey, published on April 14, shows a 35% rise in the number of investors planning to grow their portfolios of residential property as a result of the fall in house prices.

Stephen Ludlow, director of Ludlowthompson.com, says: "New-build properties have had a torrid time in the last year, contributing more than their fair share towards the overall fall in residential property prices. But signs are now emerging that the prices of these properties may finally be low enough to attract interest."

However, he warns that while prices of new build properties have fallen dramatically, they are still at a premium of up to 20% over the price of an equivalent property that is five or 10 years older.

"This premium erodes quite rapidly so you need to ensure that the discount you get reflects this," he adds.

Conversely, interest in older properties has fallen, with 74% of investors looking to buy older properties last month compared to 91% in September 2008.

The level of investors with no intentions to sell their properties has dropped only marginally, from 32% to 31%, and those who do plan to sell are not doing so for an average 19 years.

Meanwhile, investors are turning away from prime properties, with just 67% looking to increase the number of prime properties in their portfolio, down from 75% six months ago.

Ludlow says: "Prime rental properties tend to attract the kind of high flyers who have been burnt most by the financial crisis.

"Secondary properties on the other hand tend to attract middle ranking earners and public sector workers who have experienced more stability to their income in this crisis. Secondary properties also come with far higher initial yields."

The research also shows that 40% of investors would be looking at one-bedroom flats, up from 30% six months ago and compared to just 20% who are looking at investing in family homes.

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