Buy to let is Back comes the headline in the Landlord and BTL blog at Property Hawk, after the Royal Institute of Chartered Surveyors revealed a 2% increase in the number of surveyors that reported an increase rather than a fall in buy-to-let demand in the three months to September.

This follows a report last week from the Association of Residential Lettings Agents, which said that buy to let landlords were buying again, after it found an increase in the average number of properties they own.

The RICS report would seem to confirm ARLA's conclusion, until you dig a little deeper:

The RICS housing market survey -- the subject of the Property Hawk post -- has found a 2% increase in demand for buy to let property in the 3 months ending September. This is not the same as an increase in sales, or rather an increase in buying.

Another thing is the fact that ARLA recorded that landlords owned an average of 6.4 properties in Mar, increasing to 7.5 in June, and then decreasing again to 7.0 in the 3months to September -- the period that RICS said demand had risen.

Out of the 2, the better data comes from RICS. This is because if you look at the ARLA survey, in June when it said landlords owned an average 6.4 properties, it said that 375 people had answered the question. In June, when the average ownership increased to 7.5, 428 people had answered the question, and in September when average ownership was down again to 7.0, 363 people had answered the question.

It could be that the increased number in June made the survey more accurate, or it could be that most of the additional 53 people who answered owned substantially more than 7 properties and that pushed up the figure, we just don't know. As everyone who has ever studied anything knows, when you want to determine a change in one variable, all other variables must be kept constant throughout the series.

Thus ARLA's data is inherently unreliable. However, as approximately the same number of people answered in Mar and September, we can assume that the average number of properties owned by buy to let landlords increased from 6.4 to 7.0 between March and September. However, as was well covered in this article, this could be because of the spree on auction buying earlier in the year, though there were substantial numbers of new investors buying at those auctions according to reports.

Like I said, the more accurate data comes from RICS, if RICS say that demand from buy to let'ters increased in the three months to September then it more than likely did. I say this partly because it goes with what I know from outside sources, the recent price rises has optimists believing that the market has bottomed and they are getting out there looking for bargains. However, most of the bargains are currently still to be found at auctions, which are not covered by the RICS survey.

If anyone knows of a comprehensive source of information on auction sales, and the prevalence of buy to let landlords purchasing at auction please post it here in the comments. Until then, we just have to go with what we have, which is enough to suggest but not to irrefutably confirm that buy to let landlords are actively beginning to look at increasing their portfolio.

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The latest reports on the London housing market are of massively increasing demand fuelled by bonus fever. Not by people spending their bonuses, but of people buying houses in advance of the bonuses they will receive.

The Times ran an article on Monday past on how Prime London properties (£1m plus) in "bankers enclaves" are selling for prices in excess of prices seen at the peak of the boom in 2007, as banker's enter sealed bidding wars with each other and wealthy foreigners for the best properties. The reports are coming from Knight Frank, the global estate agency with a vested interest in London's prime market.

Have we learnt nothing? If we have seen the last of price drops in the UK it is only just and by extreme luck, because houses are still grossly overvalued according to impartial analysis, and still mostly unaffordable to the largest demand base of first time buyers. But we are all quick to jump and shout about how brilliant it is that these houses are selling for £5m+.

There is very little to justify these houses to hold such a value, having been worth less than a million only a few years ago. Their price is being determined by the wealth of London bankers rather than the value of the property and such cycles are only ever going to lead us into more crashes.

The bank's quick return to such huge bonuses has sparked anger in the press and the government. There is even talk of a windfall tax on the big banks.

Something like a windfall tax is the only way to stop the banks from giving out such huge payments, because the banks have to be competitive about what they pay the best investors, or face losing them.

The government stopped RBS from giving bonuses last year, and they lost staff. Trouble is they started offering multi-million Pound payments to lure the best bankers to come and work for them instead. If a windfall tax is levied on all banks then it would even the playing field and stop bonuses equally across all banks.

However, the financial services sector accounts for about 15% of UK GDP, and the government will not want to damage it too much either. We will find out in the pre-budget speech, due in the next few weeks.

I just wish that something could be done to regulate house prices at the same time. But should the prices of lavish properties in such areas really be regulated? How do you regulate a sought after property? If multiple wealthy buyers want the same property it is always going to mean a bidding war. We can't ask the seller to toss a coin. No, it does look like regulating the banking industry is where my anger will have to be channelled after all.

Across the rest of the market, demand is currently increasing. Today the British bankers Association revealed another rise in mortgage lending in September. Again it was massively higher than September last year, but lower than the peak in 2007. None the less, people are getting good prices for their homes at the moment. If you want to sell your house you can do so with Zungalow for just £29 per year.

The Financial Times index, one of the most impartial and arguably most accurate indices of UK house prices recorded a 0.6% increase in house prices in September. UK house prices are now 5.6% lower than they were at this time last year, and at similar levels to August 2006.

The FT index is compiled by Acadametrics, which said that this, the fifth consecutive monthly rise in house prices clearly indicates a recovery, but that things could still turnaround at any minute. Peter Williams, chairman of Acadametrics said:

“Consumer confidence is recovering and there are indications that mortgage supply has stabilised and might increase along with the number of properties coming to market and the transactions that follow. However, all this is delicately balanced. The government and the Bank must continue to make the right calls to avoid disrupting this fragile recovery and it is simply too soon to say the course going forward is set.”

The Acadametrics/FT index is a good one to follow, because it is not based on mortgage approvals like those of Nationwide and Halifax, it is based on actual transactions recorded in the Land Registry, but it is better than the Land Registry index because it continually adds the most recent sales recorded at the Registry, and the index is constantly updated with the changes.

For that reason, we can look at this and say that the Land Registry index for September will show prices rising again after the fall in August. I have been saying since the Land Registry index came out in August that it wasn't a blip, it was the start of the second dip, bla bla bla. Looks like I was wrong.

However, with unemployment still rising, the mortgage market still heavily restricted and supply alone holding up a market in which first time buyers still can't afford to buy, I still think a second dip is inevitable in the short term.

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Property investment consultancy Assetz have slammed the forecast that UK house prices would fall 9.8% by the end of this year made by the Confederation of British Industry.

Stuart Law, chief executive of Assetz, said: "The CBI’s house price forecast is illogical and cannot possibly be based on justifiable calculations.

"All the major house price indices are now showing consistent month-on-month growth and Assetz House Price Watch, which is based upon the UK’s main five indices, is now showing that house prices are over 1.5% higher than in January this year.

"It would be virtually impossible for house prices to fall by almost 10% in the three months to the end of December and it is hard to imagine how the CBI arrived at this figure, which implies a greater rate of fall than was witnessed even in the state of panic last year.

"More worrying is the fact that this prediction is clearly at odds with the CBI’s own view in their release that the economy as a whole is gradually improving. Random sound bites such as these are unhelpful in this sensitive market which is beginning to find its feet."

Assetz are a bit wrong in their own facts. Yes, all the main indices are currently showing month-on-month and even tri-monthly growth, but there is not only 3 months left. The three most current indices, namely Halifax, Nationwide and the Financial Times are up to the end of August, giving them 4 more monthly releases to end the year. The indices of the Land Registry and the (government) Department of Communities and Local Government, are only up to the end of July, giving them 5 monthly releases to go.

Falls of 2% or more now when -- as Assetz rightly pointed out -- the economy is showing signs of recovery, look highly unlikely. But even though the economic outlook is a lot brighter, unemployment is still rising, foreclosures are still happening, and we aren't out of the woods yet. In fact, house prices are only rising because of big rises in 11% of the country were supply of quality homes is extremely short, prices are still falling everywhere else. If foreclosures should mass or something else should cause supply to increase in those areas, then house price falls will restart anew and 1.6% per month could happen, though even I have to admit it is unlikely.

Liam Bailey is a well known commentator on global property markets, and the director of SEO copywriting services company Write About Property.

By Liam Bailey

Right, so let me start at the beginning.

Firstly, I believe that, though the collapse of the global financial infrastructure was the catalyst, that this house price correction is like any other in the fact that it has gone the way it has because homes became overvalued and unaffordable for first time buyers.

Some people believe that house prices will fall until the average house price is 3.8 times the average salary. I am not one of those people. I believe that this correction will go much the same way as the last correction (late 80s early 90s) and overshoot the long-term averages on the way down.

House prices have been rising for the past few months. The rises are not a true reflection of the market. Short-supply of quality homes in certain areas is causing those properties that are available to be sold for prices similar to those seen at the 2007 peak, and these sales, in a measure of low transaction volumes are enough to distort the overall picture.

Prices are still falling in most places. And they will continue to do so until transaction volumes pick up, so the true question is, when will transaction volumes pick up. There are three hurdles keeping transaction levels down.

1. The Economy/Unemployment

   Though there have been signs lately that we are past the worst of the recession, unemployment is still rising, and is expected to continue doing so for quite some time yet. Until less people are in fear of their jobs or already jobless there won't be sufficient demand for a revival in transaction volumes.

2. Mortgage availability:

   Banks are still under pressure to improve their balance sheets which means making more money from fewer loans. To consumers this means poor deals are on offer to anone who has less than a quarter of the house price to put down as a deposit, and the best deals go to those with deposits of 40% or more

3. Vendor Realism:

   It is a fact that short supply is driving up prices in some areas. But across the UK out of the homes that are for sale, a high percentage of those homes are at prices similar to those seen at peak. Thus, actual saleable stock, that is houses that people will actually buy is short across the country. The correction can't end until the gap between what buyers are willing to pay, and sellers willing to accept closes. This can't happen until more vendors are realistic about the market.

When the global economy has recovered, and stock markets and investments around the world are once again lucrative, when UK consumers are spending and borrowing healthily again, the banks will be making money sufficient that tight mortgage policies are not the only way to improve their balance sheets.

That will take care of number 1, and as a result better mortgages will become available to the masses, which will take care of number 2. This will then result in number 3 resolving itself, because demand will begin to increase and vendors will realise that it is only their price that is preventing the sale.

But as this is a forecast, what you really want to know then is, when do I think the global recovery will happen?

As I said, there are clear signs that the UK is past the worst of the recession, and there are similar signs that the recessionary down-track is passed and we are currently on the way back up, things like: GDP contractions of a lot less than previous quarters, retail sales up (in the EU), Europe's biggest two economies emerging from recession, and more.

I think that the global recovery will be strong in Q3 of next year, and that UK unemployment will also have turned around by this point. It will take time for this to change the attitudes of consumers and the banks, but banks should be more relaxed about their lending, and demand to buy property will start to increase by Q2 2011.

I therefore think that the UK housing market will bottom between quarters 2 and 3 of 2011. Unlike other commentators I think that price growth will be quite brisk in the subsequent few years.

Liam Bailey is a well known property commentator and director of sector specialist SEO copywriting company Write About Property, which provides SEO copywriting services for some of the biggest names in the property industry.