Over recent years residential property has been seen as a solid investment, and as such two distinct markets have emerged, each competing for the same resources. Whilst the traditional owner-occupier market has shown steady growth, the most significant move has been in the buy-to-let sector. The combination of these two competing trends has resulted in a sustained increase in prices for all types of properties all over the UK, which in turn, has resulted in increased rental prices as more people look for short and medium term housing solutions. This preference for renting has also be influenced by changing lifestyle trends which have resulted in young people being more transient and less eager to make long term financial commitments until later in life.

Whilst many analysts have been prophesising a correction for the past 2 or 3 years, investors and consumers appear to be undeterred, with double digit growth in 2006. Some feel that the recent increases represent a fundamental shift in the price of housing, rather than a temporary price bubble.

The higher price of property has led to many groups being priced out of the market; young people find it increasingly difficult to get on the property ladder and key workers are often unable to afford basic accommodation given their basic salary. This has resulted in mortgage lenders offering ever increasing rates of income to borrowers desperate to buy. The problem has been further exacerbated by the changing composition of households. Emerging trends point to an increased demand for single occupancy housing as people delay big life decisions such as marriage and family demographics begin to change.

The recent developments in the world credit market are creating new pressures on the housing market. The tightening of credit regimes and the diminished confidence in lenders will cause buyers to re-evaluate their purchases in the future. Strong leaderships from the worlds central banks will be required if the economy is to resist the downward pressures that could lead to a worldwide recession.

Fact File

• The number of one person households has increased from around 30% in 1990 to 34% in 2006, this is expected to rise even further to over 40% in 2026.
• The number of married couple households is expected to fall to just 35% by 2026, down from above 50% in 1997.
• Between 1993-2005 the price of a flat in the North East increased by 178%, this was the largest increase of any house type and is a clear indication of increased demand for single occupancy housing.
• The level of second home ownership has increased by as much as 40% since 2001.
• The inaugural edition of Halifax's Annual First Time Buyer Review shows that of the 667 main UK postal towns, 531 (80%) were unaffordable for the majority of those buying their first home during the last year.