Cash rich property bargain hunters push prices down

Cash rich bargain hunters are pushing down property prices in the UK’s hardest hit locations, according to Rightmove.

The latest housing analysis published last week by Rightmove reveals that a three tier market emerging in the UK. It says that home owners in the most economically depressed areas of the country are being forced to sell their houses for less than the current market value, while in the elite parts of London prices are expected to rise by nearly 3% this year, and the third tier is first time buyers who cannot get mortgage funding to buy a property.

Although there is growing competition in the lending to first time buyers, mortgage lenders are only willing to lend to people with at least a 25% deposit. Therefore they are reportedly gearing to chase the minority market of equity heavy to buy to let investors, which means that mortgage funds are being denied to those who need them most.

Bargain hunting bottom feeder’ investors are expected to become more prominent in the second half of the year and will push prices down in the areas worst affected. And while there is evidence of growing competition to lend in this traditional first time buyer market segment, lenders are not looking to support the greater volume of deposit light first time buyers, it says.

‘Agents report that cherry picking lending practices are leading to some dysfunctional and desperate behaviour to solve housing needs,’ said Rightmove director Miles Shipside.

‘Some average sellers of yesteryear are now trading up by letting out their own home and renting the next rung up the ladder as they cannot get a suitable mortgage to sell up and buy a more spacious house. The accidental landlord is now being joined by the deliberate limbo landlord,’ he explained.

‘Meanwhile, professional investors are being funded by lenders to buy starter homes, condemning many of those who would have been first time buyers in the past to be permanent residents of the rented sector,’ he added.

The report also indicates that the number of new properties coming to market remains subdued as a substantial element of the mass market is locked in to their existing homes. Average unsold stock levels per agency branch have now declined for five consecutive months, falling from a peak of 78 properties to the current level of 69.

Unless the government can come to some agreement with lenders to accept a lower deposit, then it looks as though the market will continue to be subdued over the next few months.