Latest house price falls to buoy rental market Published: 03/07/2008

The latest property data from Hometrack reveals that the average house for sale was worth one per cent less in June.

Concurrent research by Abbey suggests that the latest property price corrections could help boost the market for rental property.

According to the high street lender, more homeowners are being swayed by the potentially lucrative sell-to-rent strategy.

This increasingly popular scheme involves cashing in now on high capital values, renting as price corrections continue, before upsizing to a house that would previously have cost much more.

Abbey estimates that some 827,000 Brits will be adopting this course of action in the coming months.

The Hometrack data shows that average prices in June were 3.2 per cent lower than 12 months previously, after nine consecutive monthly reductions.

Though some areas are continuing to perform well, the geographical spread of the downturn is reportedly growing, with 83 per cent of locales experiencing corrections in June, compared to 53 per cent in May.

"In the short term it seems inevitable that prices will continue to post modest falls until such time as confidence improves," said Hometrack research director Richard Donnell.

"The majority of homeowners simply do not need to move and will not do so until either their circumstances change of the outlook for the economy and mortgage rates become clearer," he added.

With fewer buyers, the typical house for sale is staying on the market for longer at present, while the average seller can expect to achieve 91.6 per cent of their asking price.

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