Property investors to see 9.6% returns by end of 2010. Information acquired from various sources including Halifax, Nationwide, IMD and NAEA

The housing market seems to have shaken out the inflation excesses of the boom period of a few years ago.

Estate agents, builders and lenders are all reporting a stable level of activity, even though this may be constrained for property investors looking for profits from capital growth.

Landlords investing in residential property enjoyed returns amounting to 4.7% during the first six months of the year, says research by the Investment Property Database (IPD).

Returns of around 9.6% are predicted by the end of December.

This represents a major improvement compared to returns over the past two years, especially following the financial crisis, when they fell by 3.3%.

Capital growth in the residential property market reached 2.5% with income return rising to 2.2% during the first six months of the year.

Commercial property showed even stronger growth, with capital increases of 6.2%.

Mark Weedon, head of UK residential services at IPD, said: “Residential performance during the first six months of 2010 continues to reflect the solid returns and lack of volatility investors have come to expect.”

House prices nudged up a notch in August, according to the latest survey from the Halifax.

The mortgage lender’s figures show prices increased 0.2% putting the average home price at £167,953.

That figure was 9% above the bottom of the market in April 2009 and is still 16% below the peak of August 2007.

Year on year figures are still down despite the small increase in prices last month – from 4.9% in July to 4.6% in August.

The Nationwide said last week that prices were now only 3.9% higher than a year ago.

“Prices are now at a similar level to those at the end of last year,” said the Halifax’s chief housing economist Martin Ellis. “Activity has also been largely static since the start of the year.

“These developments suggest that the market is broadly stable, with house price inflation having cooled since last year, when supply shortages helped to push up prices.”

The National Association of Estate Agents is widely expected to support the Halifax and Nationwide figures with a monthly report from members – which is no surprise as August is traditionally a quiet month for sales and instructions due to the summer holidays.

House builders Barratt’s and Berkeley both report reasonable demand but lower sales and profits – although Barratt’s latest profit figures show a bounce back from last year’s £144 million loss to £33 million this year.

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