Countrywide reports surge in rental market as buyers struggle set to continue

Landlord Expert
By Landlord Expert June 29, 2011 10:50

The UK rental market surges as buyers continue to face barriers, report Countrywide.

The UK residential sales market remains relatively static with modest improvements in the key market indicators as potential buyers continue to be hampered by mortgage affordability and unrealistic house price expectations however the rental market continues its relentless surge; according to Countrywide.

Across Countrywide’s network of 1,300 estate agency & lettings offices, the number of buyer enquiries increased by 7 percent in May, with viewings also rising by 3 percent, but both indicators remain marginally lower than 2010 levels.

In contrast, the private rental sector remains buoyant with the number of new tenants’ registering for rental accommodation increasing by 20 percent in May, a 28 percent increase compared to May 2010. The number of homeowners considering placing their property on the rental properties increased by 15.5 percent in May compared to the previous month.

Mortgage affordability remains a critical issue despite many lenders relaxing lending levels. Countrywide operates the UK’s largest mortgage broker network and the activity of its 650 mortgage consultants has revealed a 12.84 percent increase in mortgage applications during May.
Applications for fixed rate mortgages dominated Countrywide’s Top 10 Most Popular Mortgages with all ten being fixed rate products requiring an average deposit of 12 percent at an average rate of 5.46 percent.

Interestingly, 7 out of 10 of May’s most applied for mortgages were 90 percent LTV products, highlighting the demand for higher LTV products particularly from first time buyers struggling to raise the substantial deposits still required by most lenders.

Overall, remortgage applications fell for the third consecutive month, making up 23 percent of all mortgage applications in May, as the Bank of England held interest rates at 0.5 percent, a record 27 month low.

However, remortgaging in the specialist buy-to let sector saw a six percent increase compared to the previous month.

Grenville Turner, Chief Executive of Countrywide, said:

“Rather than seeing the traditional uplift in sales activity we tend to see in the summer months, we appear to be in the middle of a standoff between buyers and sellers.

"Those sellers with realistic house price expectations that want to sell are selling.  Those with a more speculative view of the market are not.

“Buyer interest in purchasing property remains robust across much of the country, with London and pockets of the South East being the strongest with demand remaining high.

"However, the hesitant nature of the current sales market is seeing an increasing number of homeowners considering dual marketing their properties in the sales and the rental market in an attempt to see where the greatest financial value is and we expect this to continue in the coming months.

“The residential sales market remains robust as the appetite from buyers remains relatively consistent, but the inability to raise mortgage finance continues to provide a difficult barrier to overcome even though the price of 90% LTV mortgages has begun to fall again.

"A boost in consumer confidence is critical as the continuing uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand.”

Landlord Expert
By Landlord Expert June 29, 2011 10:50

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