PROPERTY investors are being urged to consider peer-to-peer as a way to diversify from traditional bricks and mortar after research shows a gap has emerged between typical drivers of house prices and actual residential property values.
P2P platform Lendy has compiled a property market index combining the traditional drivers on property prices.
It is called the Lendy Property Pulse (LPP) index and tracks average weekly earnings, employment figures, the gap between government housing targets and actual houses built, net mortgage lending and the average variable mortgage rate.
This is then compared with property values based on the Land Registry house price index.
Residential prices, using the Land Registry figures, have increased by 20 per cent since 2014, Lendy says, while the LPP has increased by just 17 per cent over the same period.
Liam Brooke, co-founder at Lendy, warned the rising prices and disconnect between the typical market drivers means 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,” he said.
“P2P lending may be a good option for investors keen to access the returns the market offers without risking too much.”
He said lower loans-to-value and holding a first charge over a property, which platforms such as Lendy offer, provide insulation from risk that direct property investment cannot offer.