Homes 'could remain unaffordable for buyers'

News Category: Industry News

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A property industry official has indicated that would-be buyers will continue to struggle to get on to the property ladder this year.

Martin Gahbauer, senior economist at mortgage broker Nationwide, said lending has to improve before property purchases can increase.

In the meantime, letting agents and landlords could be benefitting as more people switch look to the private rented sector for housing solutions in the short term.

The Association of Residential Letting Agents supported this trend earlier this month when it said the rental market is providing housing solutions for those affected by the economic crisis.

House prices could continue to fall as mortgage approvals remain low amid tighter lending criteria as financial institutions struggle in the recession - which might provide opportunities for investors to add to their portfolios.

Data released by Nationwide showed that property prices fell by 1.3 per cent this month, meaning the average house has lost 16.6 per cent of its value in the last year.

Mr Gahbauer said: "We would not expect to see a stabilisation of property prices until approvals recover significantly from current levels."

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