WEAKENING fundamental drivers in the property market are boosting the case for peer-to-peer investing, Lendy has said.

The P2P property lender unveiled its latest property market index on Tuesday, the Lendy Property Pulse (LPP), which looks at influencing factors on the sector including net mortgage lending, average earnings and housebuilding activity.

The index fell in the last quarter to 96.6 from 100, despite residential property prices rising by 3.7 per cent on average over the period.

Lendy attributed the decline to a greater supply of new homes which could dampen future price rises. Lending to the residential market has also fallen, which could indicate slowing demand for property purchases, it added.

Read more: Lendy: Large London mortgages may divert funding from new developments

However, Lendy said that property remains a solid investment and advised investors to maintain a more diversified property portfolio to manage their risk.

“The widening gap between house prices and the forward-looking LPP is a reminder that potential investors must diversify their investments as effectively as possible,” said Liam Brooke, co-founder of Lendy. “Investing via a P2P property platform is an easy way to diversify your investments.

Read more: Lendy warns housing shortage is pushing buyers to high risk mortgages

“In our view, property will always remain a sound investment if investors manage their risks effectively, and make sure they diversify across different types of property investment and investment term.

“Lending against property without taking on the equity risk of buying can be a better option for investors, providing diversified security rather than a large direct investment.”

Read more: Lendy loan book soars by three quarters in first half of 2017