Homeowners sell and rent in hope of price crash

Homeowners are selling up and renting in the hope of cashing in on a house-price crash, property experts said in a report published today.

Demand for rented property has surged to its strongest level for two years, says the Royal Institution of Chartered Surveyors. "Fears of a house-price slump have seen some households bring sales forward and rent while they wait and see what happens to price," it said in its quarterly survey of the lettings market.

Rics said people who were not yet on the housing ladder were choosing to continue renting because they could not afford to buy.

The Council of Mortgage Lenders last month said the number of first-time buyers as a share of the mortgage market had fallen to its lowest level on record. Halifax, the largest mortgage lender, has published research showing that first-timers are getting older and putting down larger deposits when they do buy.

There was only a modest increase in new instructions received to let property in the three months to April compared with the huge surge a year ago when the buy-to-let boom was at its height.

As a result rents held steady after falling in each of the previous four quarters. Actual falls in rents were confined to London and the South-east while other regions rose. This was driven by a drying up of demand by companies for lets for their employees or customers. Corporate lets accounted for less than one in 10 of all rental deals compared with 15 per cent in January 2001 at the tail-end of the late 1990s boom.

This mirrors evidence that there is a clear dividing line in the housing market price falls across the South and South-west and rises elsewhere. Jeremy Leaf, Rics's residential lettings spokesman, said: "Strong demand for rented homes has helped rents hold steady."