The oversupply of properties in the letting market is beginning to stabilise

The oversupply of properties in the letting market is beginning to stabilise as the number of people looking to rent a home picks up, research has shown.

The rental market had been flooded with properties as people unable to sell their home during the housing market downturn tried to let it out instead.

But the latest figures from the Association of Residential Letting Agents (Arla) showed 33% of agents thought supply and demand was back in balance during the three months to the end of September, up from just 19% during the previous quarter.

At the same time, the number of people who thought there were more properties available to rent than there were potential tenants dived from 70% in the second quarter to 43%, while 24% said demand now outstripped supply.

In a further sign that demand is picking up, 83% of agents said they signed up 10 or more tenancies during the period, compared with 79% in the previous three months, with each agent arranging an average of 36 new tenancies, compared with 32.6 previously.

Ian Potter, operations manager of Arla, said: "This shift in the balance of supply and demand is extremely significant for the private rented sector.

"It gives further evidence to suggest that the property market as a whole is getting back on its feet.

"This shift also indicates that confidence is rising among prospective tenants; it seems that people who delayed setting up home 12 months ago, now feel secure enough to proceed."

The research also reported a drop in the average time a property is empty for between tenants, with this decreasing from 4.3 weeks in May to four weeks in August.