Is the rental market about to collapse with oversupply of unsold homes?

It's all very well taking advantage of the weak sales market to buy investment property cheap, but it seems thousands of new landlords are being created every week when they decide to let their home that they can't sell.
Until now, demand has met the supply as among others, first-time buyers keen to move out of their parental home but unable to fund mortgage deposits have willingly stumped up the cash to rent.
However, as unemployment rises and less new jobs are created it stands to reason that current rents will become less affordable for the average tenant. Many first time buyers / renters will choose to wait a little longer before fleeing the family nest. Equally, with more and more quality stock coming to market, tenants will have more choice than ever and we will be in the unique position of having both a buyers and tenants market a the same time.
Taking this to its logical conclusion, if landlords are unable to let their properties at economically viable rates, more and more will default on their mortgages leading to more repossessions, a further tightening of credit from banks and a continuing spiral of housing depression.
This may all seem a little apocalyptic but an article in the Guardian is already pointing to falling rents in major cities including London and Manchester: http://www.guardian.co.uk/money/2008/aug/19/renting.property
With the inflationary threat far from over especially as the weaker pound pushes up import prices from Gas and Oil an imminent interest rate cut is surely looking less likely than before.
So next time you're offered a 'bargain' property, my advice is to think long and hard about how cheap it really is.
This is the first recession of the Buy To Let era. It would be ironic if the freeing up of the credit systems that created the recent housing boom have also sown the seeds for the current downturn.