Liverpool apartments market weakens
By Bridging Loan Directory -
The value of city centre apartments in Liverpool’s moribund residential property market fell by a further 6% in 2011, fuelled by a significant number of repossessions according to BusinessDesk.com.
A new report by estate agency City Residential reported that prices dropped by a further 1.6% during the last quarter of the year, bringing the price of an average one-bed city centre apartment down to £92,500, while a 900 sq ft 2-bed duplex has dropped to £146,000.
The value of docklands apartments has also fallen, but not by as rapid a rate and the average 2-bed Docklands duplex fell 3% to £180,000.
City Residential’s managing director Alan Bevan said that although low levels of transactions made it difficult to draw meaningful conclusions from the figures, repossessions at certain developments had begun to drive down prices.
“There have been two developments where we have seen a substantial amount of repossessions (relative to the size of the scheme) brought to the market and sold during the quarter. These prices have often been at a discount of around 20-25% to what we would determine is the open market value (say £85,000 instead of £110,000).
“Logically, these have valued up fine, but what affect will they have on the rest of the apartments in the scheme? The landlord, who is clinging on to his investments helped by low interest rates and strong tenant demand, isn’t going to be impressed.
“The surveyors (despite appreciating the repossession is a forced sale) can’t help but acknowledge the price and it will undoubtedly have some affect on their thoughts at a future valuation.
“The worst-case scenario is where a substantial chunk of repossessions could create a downward spiral in down valuations and further repossessions.”
However, rent levels for the majority of city centre apartments have continued their recent upward trend. The average rent for a one-bed city centre apartment increased by almost 2% to £551 per month, while rent for a two-bed duplex increased by 1.7% to £713 per month.
Bevan had previously expressed surprise at the lack of investor activity given the attractiveness of current yields, but said that interest from investors had begun to pick in the New Year.
“Maybe buyers are beginning to realize that all the talk of oversupply, empty apartments and falling rents couldn’t be further from the truth and are taking the opportunity to buy before other investors began to spot the potential,” he added.
The firm said that the “scramble” for student accommodation witnessed at the start of the academic year, had highlighted the fact that the city doesn’t have a huge amount of available stock.
“Most landlords appear to be in a comfortable position at present.
“Whilst some are coming under serious pressure if having to refinance, the majority are seeing rising rents, minimal voids and in many cases a growing demand for their property.”