Investors are making a confident return to the housing market this spring as yields stay strong and house prices begin to climb again, according to a housebuilder report.

Compared to 2005 the market is vibrant, driven by high levels of consumer demand and opportunities for investors to borrow money relatively cheaply. The continued health of the market does therefore depend largely on static or falling interest rates, said specialist builder, Linden Homes.

A further drop in rates over the coming months, as widely anticipated, would provide a further boost and convince remaining investors who have held their nerve throughout 2005 to return to the market with a long term view.

First time buyers too are making a noticeable return, underpinning prices and generating confidence at the lower end of the market, which is also good news for investors.

Philip Davies, chief executive of Linden Homes commented: "I am encouraged by the number of professional investors making reservations this January and February, who have chosen not to expand their portfolios until now."

"They are investing for the long term and are expecting steady house price inflation of 3 – 5% rather than a return to the growth levels of previous years."

The buy-to-let market is expected to grow at a healthy pace throughout 2006, spurred on by factors such as increasing numbers of household break ups, growing student populations and increased immigration.

The firm expects the housing market to remain price sensitive through 2006 with asking prices remaining considerably more realistic than during 2005. "We can look forward to the market continuing to gather momentum in the first half of the year," said Mr Davies.

The Linden Investors Club offers members many benefits including discounts and advanced details of forthcoming Linden schemes and incentives. The firm says it is very committed to the investor, from private landlord to Institutional Fund Manager and is launching a series of seminars this year for both groups.