Thousands opt for renting as home sales fall
The number of people renting in London has soared by almost a fifth in a year because of the paralysis in the property market.
The unprecedented 19 per cent growth in rental leases comes as the volume of mortgage approvals slumped by two thirds to the lowest level on record.
Tens of thousands of Londoners who cannot get finance or are fearful of overpaying in a falling market are turning to landlords instead, according to the figures from Your Move estate agency.
The trend reverses decades of decline in the private rental market in London during the boom years of the property market.
David Newnes, managing director of Your Move, said: "People who would have fallen into the first-time buyer market a year ago are now renting.
"The credit crunch has buried any chances most might have had of getting on to the property ladder.
"Mortgage finance hasn't been this hard to come by for 15 years - but for landlords this is a cloud with a goldplated lining."
Letting agents said the current demand in London was "spectacular" and reflected the so-called "brickor mortis" afflicting the housing market with sellers reluctant to lower their prices and buyers terrified of paying over the odds.
Emilie Dawes, lettings director of agents Marsh & Parsons, said: "We're doing 30 per cent more transactions than this time last year and growth is at all levels.
"There has been an 18 per cent increase in the number of transactions above £1,000 a week."
Figures from the banking industry show that the number of mortgages approved last month was 66.9 per cent down on last year at just 21,118, the lowest figure on record.
The proportion of mortgages approved for home buying - as opposed to remortgaging - was also at an alltime low of 19 per cent of the total.
David Dooks, statistics director of the British Bankers' Association, said: "Another record low number of mortgages approved by the banks for house purchase means that the whole market is likely to be at its least active since the early Nineties."
Confidence in the housing market was given another jolt today when it emerged that one member of the Bank of England's Monetary Policy Committee voted to raise base rates from five per cent to 5.25 per cent when it met at the start of the month.
Although Tim Besley was out-voted by the other committee members, it is a worrying sign.
The Bank is charged with bringing inflation, as measured by the Consumer Prices Index, back down to two per cent. It has been forced up to 3.8 per cent by soaring oil and food prices and is expected to burst through fourper cent by autumn.
