Despite this drop, Davis predicts that house prices will still be high enough to prohibit most first-time buyers from getting onto the property ladder. This will be reinforced by the uncertain employment market, making people unwilling to commit to taking out mortgages.
However, explaining that the market will actually work in favour of both tenants and landlords, Davis said: “Falling house prices will make it a good time for landlords who have been in the market for a while. Those who have built up real equity are now in the enviable position of being able to buy stock at reduced prices. And, this time around loan to values should be far more manageable.
“And, I believe that stabilising rents will give them a much better return on investment than they have witnessed in recent years.”
As a result, Davis believes there will be a significant increase in the number of rental properties available, potentially increasing by 25% to more than four million.
“By giving tenants greater choice, this will work towards renting being a norm, as opposed to a taboo,” he said.
“I predict that today’s market conditions will improve the currently tarnished reputation of the buy-to-let sector and make it a viable option in the UK.”
Will renting rise in 2009? Tell us what you think using the comment section below