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Buy to let investors cashing out are key to fate of sales market - claim

A leading housing market analyst says the sales market is increasingly determined by the acts of buy to let and other property investors.

Doug Shepherd, director of the listings platform Home and the author of a monthly market index, says his analysis of the market indicates it works like this.

“Prices rise to the point where rental yields are unattractive. This, in turn, triggers a surge in supply as investors try to cash out. The supply surge puts an end to price growth and buyers become hesitant. Demand falls and prices steadily correct without disastrous consequences. 

“Thanks to relatively benign lending conditions, potential vendors can (and do) choose not to sell and supply is reduced to the point where price growth is rekindled. The cycle is complete.”

Shepherd says this is particularly the case in London.

“Low borrowing costs mean that most vendors are not forced to sell. They can opt for short-term lets or similar while market conditions improve. Moreover, the dearth of available rental accommodation in the capital makes this process relatively easy, and rents are rising rapidly in the central boroughs.”

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