In short, if house prices continue to recover and lending criteria doesn't relax to improve affordability, then first-time buyers will still struggle to get onto the property ladder. This is good news for the rental sector with first-timers forced into renting properties for longer periods.

According to the Council for Mortgage Lenders (CML), the UK rental sector is still relatively small compared with other parts of the industrialised world, suggesting there's room for further growth. On top of that, the persistent housing shortage problems continue to support demand from tenants.

But an increase in the number of reluctant landlords - that is, homeowners who are unable to sell at a decent price and are letting their property instead - means there may be more properties available than there are tenants, which would depress rents.

Of course, on the other hand, if house prices recover, reluctant landlords may choose to sell, resulting in a shortage of rental properties which would then push rents back up.

The fact that we're in the middle of a recession, with the threat of rising unemployment, could be bad news for rental arrears. While the CML reports that arrears improved in Q2 of the year, they remain at historically high levels.

So, the prospects for the market are hard to call. But I would say here that despite all the data, what's arguably more important is the buoyancy of your local rental market.

It's a very good idea to speak to some lettings agents in your area to find out what local tenancy demand is really like. Get to know the level of rental income you can realistically achieve based on the type of property you want to let. And check out whether you're likely to be faced with long periods when the property won't be occupied.
Buy-to-let mortgages

What we do know for sure is that buy-to-let lending has endured some very troubled times indeed. The market has been far more heavily affected by the shortage in wholesale funding than the residential lending market.

In fact, many buy-to-let lenders have withdrawn altogether.
But it's not all bad news. Borrowers are now enjoying lower interest rates and therefore, lower mortgage repayments in just the same way as the wider mortgage market. This has improved affordability for landlords.

And, as many buy-to-let mortgages are set-up on an interest-only basis, the fall in monthly repayments will be greater compared with mortgages arranged on a capital and interest basis.

However the fact remains that if you apply for a buy-to-let mortgage, you'll still need a hefty deposit of between 25% and 40%. Often fees for arranging the mortgage are charged as a percentage of the amount you borrow - 2.5% to 3% isn't uncommon, which would set you back 3,750 pounds to 4,500 pounds if you borrowed 150,000 pounds.