City centre flat loses half its value in three years
Dec 7 2007
by David Bartlett, Liverpool Daily Post
THE impact of the property slowdown in Liverpool was starting to bite last night, after a luxury apartment sold for less than half the price it fetched three years ago.
A two-bed apartment in the original Beetham Tower, which was bought for £206,500 in May, 2004, sold this week for just £101,000 at auction.
The property had been on the market at £165,000 for almost two months, and was put up for auction in London with a guide price of £120,000.
City estate agents said that, while the price of the apartment was not typical, it was a sign that the market was correcting itself.
It came as the Bank of England cut the base interest rate by 0.25% to 5.5% – the first reduction since August, 2005.
Last night, economist Peter Stoney, honorary senior fellow at Liverpool University, said the cut was a step in the right direction but not enough to prevent a drop in property prices.
“It should have been half a per cent to prevent the fall in house prices.
“This anecdote about the apartment is part of that fall-out, and we are going to see prices coming down. It is just the start of several stories like this that we will see reported.”
James Kersh, from Merseyside’s Sutton Kersh estate agency, said: “The value of a two-bedroom apartment is typically around £140,000. This sale is not indicative of the market, but it shows there has never been a better time to buy.
“If you do have the cash, there is plenty on offer and plenty of bargains.
“There are wide expectations that values will move up towards spring, 2008, because the market in Liverpool is still under-valued.”
He said the three-bed market for apartments priced between £250,000 and £275,000 was particularly strong.
“We should not forget that the auction market benefits from repossessions.”
Earlier this week, the Halifax reported property prices had dropped for the third month in a row. The slide pushed annual house price inflation down to 6.3%, its lowest level since March last year.
Leading global property consultants, Knight Frank, have also just published their latest annual Northern residential review, which argues that developers need to ensure they build top-quality apartment schemes if they want to succeed in the current environment.
Lee Pugh, sales negotiator for Entwistle Green, which had originally marketed the flat in Beetham Tower, said: “It just shows that flats are hard to sell.
“Prices have peaked and are starting to come down. To sell houses at the moment, we are having to ask owners of properties that have been on the market for more than three months to reduce the price.”
He said the 0.25% rate cut would not have a dramatic effect: “In particular, the flats market is saturated.”
He said the flat in Beetham Tower had been on the market for seven weeks prior to being put up for auction, and was sold on behalf of Halifax after it had been repossessed.
Dougal Paver, of Paver Smith PR, who represents a number of developers such as Downing, Maghull Group and Merepark, cautioned against worrying too much.
“This is a market correction and a sign therefore that the market is functioning correctly.
“I feel sorry for the investor who has suffered the loss, but you are always advised when buying a property that it’s a risk.”
He said there was high demand for small one and two-bedroom flats at the moment.
“The problem is the mix of many schemes has insufficient one and two-beds apartments to satisfy the demands of planners.
“This might be a salutary lesson to those seeking to direct the market that the market will direct itself.”
Source: Liverpool Daily Post