Asking prices are now growing at the slowest annual rate for over six years as buy-to-let investors become less active, Rightmove said today.
A second property website, Home, said that the market correction is “well underway”, while Hamptons International said landlords are buying fewer buy-to-let properties and spending less when they do buy.
According to Hamptons, there were 64,260 buy-to-let purchases in the first half of this year, down 13% on the same period last year, and 31% down on the first half of 2015.
Landlords spent £12.1bn on buying rental properties, down 30% from the £17.3bn spent in 2015.
Separate Rightmove data out this morning shows new asking prices were up just 0.9% annually this month to £307,245, which is the lowest annual rate of growth since February 2012.
Price growth has also hit lows on a monthly basis, at 1%, the lowest rate for October since 2010.
The overall low rates of growth were attributed to asking price falls on smaller homes typically purchased by landlords and first-time buyers.
For two-bedroom or smaller properties, new asking prices fell 0.1% over the month to £190,587, with selling time rising from 55 to 58 days.
Miles Shipside, housing market analyst for Rightmove, said: “Landlords are clearly buying far fewer properties and that leaves a gap in the market for first-time buyers.
“While landlords were hit with a 3% Stamp Duty surcharge on property purchases back in April 2016, in contrast most first-time buyers were effectively awarded Stamp Duty free status in November 2017.
“The fall in prices at the bottom of the market during what is a traditional busier time means that those keen to sell need to price accordingly, which gives an opportunity for those Stamp Duty free first-time buyers to negotiate harder.
“First-time buyer mortgage approvals are up, albeit by a marginal 1% year-on-year, showing that some first-time buyers are helping to fill the gap in the market left by less competition from investors.
“If the Chancellor’s Budget this month encourages more landlords to sell to long-term tenants via Capital Gains Tax relief, then landlords who are looking to sell and renters who aspire to become first-time buyers could work together for their mutual benefit.”
Meanwhile, Home has claimed price cutting is “the new normal”.
The property information website said 16% of properties currently for sale have had their prices reduced in the past 30 days, a percentage last seen in January 2009.
The total number of properties that had their asking prices reduced in September soared to levels last seen in September 2011 at 83,780 in the UK, Home said.
This put average asking prices at £309,366, up just 0.6% annually.
Overall supply of property for sale in the UK was up by 6% and the total stock for sale has increased by 10.7% year-on-year, while typical time on the market has increased by three days to 92 this month compared with October last year.
Doug Shephard, director of Home, said: “The market correction is now well underway. This month another key region, the east of England, joined the year-on-year negative club, and the south-west is applying for membership.
“Overall, annualised price growth for England and Wales looks set to hit zero by the end of the year and fall into the negative in early 2019.
“This is the hangover after one of the biggest property investment binges in UK history, fuelled, of course, by ultra-low interest rates. How long it will take to play out is unclear but we don’t expect the market to return to overall growth any time soon.”
Hamptons said that lack of new supply has led to rent rises in every region.
Source: Property Industry Eye