Lendy highlights gap between property prices and key influences

The Lendy Property Pulse (LPP) has revealed that residential property prices have moved ahead faster than their fundamental drivers due to rising property prices overtaking real wage growth.

Lendy stated that residential property prices have risen by 20% since the start of 2014, however, the LPP, the new property market index, has only increased by 17% during the same period with the gap between them continuing to grow.

The LPP tracks indicators that influence the UK residential property market, including:

•    Average weekly earnings
•    Number of individuals in employment
•    The gap between the government’s housing targets and the number of houses that have been built
•    Net mortgage lending for residential properties
•    The average interest rate on a variable rate mortgage.

Lendy offers LTVs of 70% or below on all its properties and stated that investors can also lower the risk involved in the property market by diversifying their exposure.

Along with other P2P platforms, Lendy allows individuals access to different types of property and risks/return profiles, resulting in a larger mix of higher yields and medium yields.

Liam Brooke, co-founder at Lendy, said: “As residential property prices have continued to rise in some areas, they have begun to outpace the fundamentals that drive the market.

“That rise means that those considering investing in the residential market need to make sure they take steps to manage their risk.

“The property market still offers very attractive returns, but rising valuations of this kind make avoiding equity risk an option all property investors should consider.

“Peer-to-peer lending may be a good option for investors keen to access the returns the market offers without risking too much.

“Limited LTVs and holding a first charge over a property provide insulation from risk that direct property investment cannot offer.”

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