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Bargain hunting

21st July 2008 | back to article listings BACK    print this article PRINT

Economic misery has tightened up everyone's purse strings and the housing market has been one of the biggest casualties of the credit crunch. However, every cloud has a silver lining, and it would seem that in the current environment landlords are well-placed to bask in this silvery light. Figures released today by Rightmove have shown that sellers are lowering their asking prices with many properties remaining unsold due to a lack of buyers. With many first-time buyers unable to agree a mortgage due to the demands from lenders for bigger deposits, buy-to-let investors could be well-positioned to take advantage of the property market's current predicament.

According to the Rightmove House Price Index, sellers have dropped their asking prices by £4,345 (1.8 per cent) over the past month. And overall, values have dropped two per cent compared to the same time last year, while the number of unsold properties has risen from 74 to 77. As the lack of first-time buyers means sellers are forced to lower their expectations, this could mean buy-to-let investors can seize the opportunity to find a bargain.

Commercial director of Rightmove Miles Shipside stated: "We are measuring very low levels of new sellers for this time of year, around 20 per cent down on 2007. This has a limiting effect on the supply of unsold property," adding: "Sellers are finally recognising that they need to undercut their rivals from the outset, rather than testing the market and dropping prices later. Whilst this £4,000 reduction is on top of a £3,000 drop last month, sellers' pricing needs to be at the level where deals are being done." However, some investors may be keen to wait longer to find the opportune moment to expand their portfolio, as prices could drop further still. Mr Shipside remarked that sellers may have to make "bigger" reductions in the future "as prices continue to fall".

This news follows research that the privately rented property sector is going from strength to strength. Findings from Professor Michael Ball of the University of Reading on behalf of the Association of Residential Lettings Agents (Arla) revealed that privately rented properties are now worth more than the commercial property sector - totalling £500 billion. And what's more, rents could rise by around ten to 15 per cent during the course of the rest of the year and into 2009. Claiming that this success is actually stabilising the struggling housing market, Arla head of operations Ian Potter said: "It was as a result of the appalling effects on young owner occupiers last time that Arla took the initiative and launched buy-to-let to re-build and re-finance the private rented sector and to mitigate the dreadful social consequences of housing boom and bust." Thus, while investors are out seeking their next good deal, they could indeed be helping the long-term prospects of the wider market.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4291.html. Alternatively, please see our full press release archive.

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