As new vendors coming into the housing market raised their asking prices by 3.1 per-cent this month, ‘Mr Average’ has been frozen out of the market as Rick Flay at Belvoir Sheffield, the leading lettings agent in Sheffield explains….
With house prices remaining at virtually the same level as they were in February 2010, low transaction levels in the housing market means that ‘Mr Average’ is suffering from paralysis due to a lack of mortgage finance and insufficient equity to trade up.
Rick Flay, Director at Belvoir letting agency Sheffield, said: “The housing market is being split into three main groups made up of the elitist tier, the middle tier made up of ‘Mr Average’ and the bottom tier searching for a bargain, or a start in the market.”
“The top tier of the market is now being dominated by lenders who are attracted by low loan-to-values that help them build a more profitable and lower risk mortgage book. This accounts for the active but low volume market in the UK’s most desirable locations, which are often found in the south.
“The middle tier is made up of the mass market where ‘Mr Average’ would be found, and is the main group of people suffering from the effects of raised house prices and increased deposits, keeping them off the proverbial property ladder.
“Finally the third tier is made up of the bargain hunter. In the more economically depressed areas of the UK, many homeowners are being forced to sell or are having their properties repossessed. Some sellers are falling victim to the bargain hunter investor. These investors are often cash-rich buyers seeking out distressed sales in the current crisis.”
Partly down to this three tiered marketplace, ‘Mr Average’ is being forced to rent in order to move on with his life, as purchasing a property is just not an option.
Transforming the buoyancy of the lettings market, this latest increase in house prices is seeing the re-emergence of the ‘accidental landlord’ – the owners of family houses who want or need to move but cannot find buyers willing to pay the asking price. This is resulting in them letting out their own properties and becoming landlords by accident.
Rick, whose office on Campo Lane specialises in property to rent in Sheffield, added: “In recent months the market has seen a new spate of accidental landlords who are re-entering the rental market by letting out their existing home and purposely moving up the ladder by becoming a tenant in a larger property.
“Because ‘Mr Average’ can not afford to buy a property, it means that the rental market is booming and ‘Mr Average’ can get on with the next stage of his life.
“For this cycle to change the loan-to-value ratios need to be increased and the banks need to increase their willingness to lend. With the current mindset of the banks, the rental market is set to thrive for some time to come.”
Belvoir Lettings Agency Sheffield is the One Stop Specialists for Lettings including Property Management, Tenant Find, Investment and Wealth Management Advice, Fit-outs and Renovations, Furniture Packs and Investment Property Insurances
