Mortgage News Good Month For Landlords Bad Month For Mortgage Market
01 July 2008 / by Joy Tibbs
With the credit crunch still taking its toll on people’s pockets, the housing sector continues to experience turbulence. However, while landlords appear to be prospering, home buyers and sellers are under increasing pressure.
A new study from buy-to-let specialist Paragon shows that landlords are confident about their property investments and are expecting demand for rental property to remain strong in the foreseeable future.
Paragon’s poll shows that 54 per cent of landlords surveyed said that they expect demand for rented accommodation to rise throughout 2008, while just five per cent believe it will fall. More than a third (36 per cent) think demand will remain stable.
Furthermore, the length of time properties remain tenantless has fallen to the lowest level since 2006, with average void periods at just 2.7 weeks per year.
Group director of mortgages at Paragon, John Heron, said: “We have consistently said buy-to-let has strong counter-cyclical qualities and we are now seeing concrete evidence of this.
“Potential homebuyers are postponing purchasing decisions because they either feel uneasy about the current market or they simply can’t get a mortgage, so they are renting.”
Meanwhile, Hometrack has found evidence that the mortgage market is suffering, with house prices falling for the ninth consecutive month in June, with the average price down one per cent compared with May to £170,500. Average price was down 3.2 per cent compared with June 2007.
Furthermore, while new buyer registrations fell 5.7 per cent compared with May, the number of registrations has dropped a staggering 52 per cent since the start of the credit crunch. The percentage of home sellers achieving their asking prices was 91.6 per cent compared with 92.3 per cent in May.
Director of research at Hometrack, Richard Donnell, said: “The net result is a sizeable drop in transaction volumes which look set to reach levels not seen since the 1970s.
“In the short term it seems inevitable that prices will continue to post modest falls until such time as confidence improves.”
©Fair Investment Company Ltd