RESIDENTIAL:

Cost of rent stops rising as supply doubles:

The number of rental properties available across the country has almost doubled in just one year. It highlights the increasing pressure on the property market and signals how some are struggling to service their mortgage debts. The survey shows that it has directly resulted in a stagnation of rental prices for the first time in four years. The survey of rents in the last quarter of 2007 shows that the average rent nationwide remains unchanged.

Economist with the E.I.U. said there was a 90pc surge in advertised rental properties across 2007, with 50pc of a jump in the final quarter. “Although demand for rental properties is likely to have expanded too, it will not have matched the doubling in supplyć, he said. “ The inevitable result is to be seen in rents. The strong increases in the past couple of years are slowing sharply.ćThe sudden surge in supply can be traced directly back to an increase in base interest rate which increased from a historic low of 2pc to 4pc. “The most likely explanation for the increase in supply is those who had invested in property but had not sought a rental income are now doing so. As interest rates rose, so did debt-servicing costs, while at the same time capital gain evaporated as prices stopped rising. Those who had been willing to forego rental yield are less and less willing to do so now.