She said:
“The autumn has seen demand from tenants increase by 32% compared to the same period last year with rental stock, on the other hand, down by 12% over the same period. The record levels of demand are being driven by the large number of people either priced or consciously opting out of the sales market and deciding that renting, rather than buying a property, is their best option for the time being.
"On the supply side, we are seeing more tenants staying on in their existing properties, preferring to accept a rent increase rather than risk searching for something suitable in the open market. This has been exacerbated by a reduction in the number of new investors entering the market to satisfy additional demand.
"Much of what we have seen in 2010 is likely to continue as we head into 2011. Tenant demand is likely to remain high and outstripping the supply that will be available. Factors to consider for any current and new landlords stepping into the market will be the VAT increase and possible likelihood of interest rates rising.
"As would-be buyers remain in the rental market for longer due to the ongoing challenges in securing a mortgage, I would expect to see strong applicant levels, as we have done throughout 2010. However, if landlords raise prices, it is possible we will see more tenants giving notice as they will no longer see the benefit of staying from a price point of view and may well make the move.
"Mortgage finance is still the main obstacle for those wishing to invest, but I think it is possible that we may see a few new landlords dipping their toes in the market as buy-to-let mortgage lending improves and the opportunity for long term investment and stable rental income continues to present itself as an attractive proposition.
"There are still some vendors switching to the lettings option, although not as many as in 2009. Going forward, those that are in a position to let will do so and value the rental income they receive. This is where working alongside a sales business works well, as it enables those landlords that originally wanted to sell to try and find an investor with a tenant in situ, which is something we have seen more of towards the end of 2010.
"The lettings market remains strong and landlords have more choice because of the level of demand which, as we enter into 2011, will enable them to achieve the best tenants at the best possible prices.”
Douglas Sleaper, Group Sales Director of Townends Estate Agents, part of the Badger Holdings Group, comments on the sales market now and for 2011.
He said:
“At present, we are certainly seeing house prices falling and many of the gains made in the spring and summer months are being lost as we head to towards the end of the year. However despite these falls, prices will still end the year higher than they started for most of the market.
"It is possible that the first half of 2011 will see further house price decline, with signs of recovery coming in the second half of the year, the opposite of what happened in 2010.
"We are also seeing a return of buy-to-let investors, attracted by an increased range of specialist mortgages available and of course enhanced yields due to rising rents and falling prices. Given the shortage of First Time Buyers in the market this is a very welcome development.
"With regard to financing, “near prime” mortgages will start to become available for those who have only missed a couple of mortgage payments – the banks are starting to lend to these people again – and we are already seeing a return of re-mortgaging.
"However we are not expecting 2011 to herald the return of 90% plus LTV lending in any real sense. We don’t expect interest rates to rise until the end of 2011, despite the inflation concerns, due to the broader economic outlook and the forecasts for rising job losses over the next few years.
"Most research suggests that the impact of Government spending cuts will vary from region to region, with London and the South East faring better than northern regions, not least because a smaller percentage of employment comes from the public sector.
"Currently, the banks have been taking a soft line with defaulting borrowers but I feel that this may well change in the Spring of next year and we will see more repossessions coming to the market. However, nobody is forecasting a return to the numbers that were seen in the early 1990s and we do not feel that the market will be adversely impacted as a result.
"So the market will again favour those with cash or large deposits with bargains to be had for those prepared to take the plunge ”
