The survey shows 41 percent more chartered surveyors are reporting price falls than rises, 12 percent more than September and the highest number reporting a fall since December 1992. There is however little evidence of panic selling.
This continuing drop in house prices may in the short term actually lead to an increased demand for rented property bolstering landlord’s cashflow, says Mortgages for Business, the UK’s leading investment property brokerage.
“However, the downside is that the ability of landlords to realise capital by remortgaging assets would also be reduced,” says David Whittaker, Mortgages for Business managing director.
The base rate increases since November 2003 have suppressed higher level loan to property value buy-to-let borrowings and have acted as a natural break on further property acquisition, requiring now greater capital injections on purchases. This is supported by the slowdown in rate of activity of landlords who remain active but in a more considered and focused manner.
The RICS survey reports encouraging signals from the London property market where house prices are seen to be levelling off. This is also reflected in the London buy-to-let market where, after a period in the doldrums, landlords are beginning to see sustained rental growth.
“Investors should note however, that yields in London remain the lowest in the country, but investors must off-set this against the country’s highest property prices and capital appreciation opportunities,” adds David Whittaker.
