quote : "It can only get worse, as there are many more flats coming to the market by 2008"
The rampant property speculation in city centre new-build 'apartments' is coming unstuck.
My guess is many of these flats will end up as 'social housing' or even demolished and that many of those who have already bought one will lose out badly............................
Daily Telegraph
Flat on its face
(Filed: 17/12/2005)
London Tunbridge Wells Southampton Leeds Nottingham Bristol Cardiff Manchester Liverpool
The souring of the inner-city dream has left a glut of empty, new-build apartments, affordable to few and situated in communities bereft of families. What now for the super-cool, urban living space that stands empty? Caroline McGhie reports on a post-Sipps nightmare
As early as spring last year, residential analysts at the Savills estate agency were predicting that too many new flats could swamp the market. The figures tell the story. In 1999, about 17 per cent of homes being built were flats. By last year, this had soared to around 42 per cent and this year it went up again to 45 per cent.
Ken Livingstone and Silvertown Quays' architect Terry Farrell
"Planners should be getting worried about the numbers being built," says a Savills spokesman. "We doubt that the national need for housing is best served by the development of one- and two-bedroom flats."
In the drive to build at a higher density on brownfield sites, it suggests, the Government has neglected to think about what buyers actually want. It gets more damning.
"The policy has not even led to more homes being built. The development of flats ties up so much cash that housing output has not risen. Rather, we are simply changing the balance of what is being built."
While young city movers may relish the loft-and-latte lifestyle, the market for what Savills calls "new product" could be thin beyond city centres. "For large swathes of suburban, semi-rural and rural areas, the high-density approach needs to be treated carefully, as the demand for the end product can be very limited," adds the spokesman.
Now that buy-to-let has slowed, interest rates are higher and transactions are at their lowest figure since 1974, developers are left with huge projects on their hands. Following Gordon Brown's cancellation of Sipps benefits on residential property last week, the expected flow of eager investors has effectively been plugged.
"There isn't much developers can do," says Richard Donnell, research director at Hometrack. "They can spend more on marketing, offer incentives, cut prices, grin and bear it. The other thing we will see is that they will go back to change the planning permission to 100 per cent affordable housing, and then sell on to a housing association."
Building flats in city centres has regenerated many no-go areas and the number of residents in central Leeds, Sheffield, Manchester, Liverpool and Newcastle has grown 140 per cent in the past decade.
However, this has been at a social cost: there are few families or elderly people, and some areas are regarded as unsustainable as a result, says Knight Frank's recent Future City report.
A Dockland's penthouse - but the buy-to-let market may be slowing down Liam Bailey, head of residential research at Knight Frank, says that many developers with flats coming on to the market now bought the sites several years ago, when the market was still buoyant.
As prices have stagnated, he predicts that they will have had difficulty recouping their costs, particularly with "standard" flats, "because they don't have anything unusual about them that could help them sell on in the future".
London
More than 90 per cent of planning permissions in the pipeline are for flats, with Southwark, Hackney and especially Tower Hamlets due to swallow at least 52 per cent of them by 2016.
"Concern grows that new-build family housing is becoming a rarity in city centres," says Knight Frank, in its latest report, The New London. As investors shrivel, some developers are offering 10 to 20 per cent discounts on group purchases.
"The market for two-bedroom flats in secondary locations has been the hardest-hit, with some areas being flooded by a mass of identical products."
While there is still a great need for flats in London, analysts worry about the wisdom of so many coming on to the market in the East End, especially in the Royal Docks, which has only the Docklands Light Railway for public transport.
Buy-to-lets may be having a hard time already - Knight Frank has 60 to let in Docklands, priced at £595 to £695 per week. Last March, the largest site in the Thames Gateway area, 59 acres at Silvertown Quays, was launched to provide nearly 5,000 residential units, most of which are flats (and the biggest aquarium in Europe).
Royal Albert Basin is likely to pile in another 2,000 to 3,000.
Tunbridge Wells
"This is an area where the flat market has grown tremendously. A lot of schemes are coming to fruition now, arriving on the market at the same time," says one analyst.
Tunbridge Wells, where there is an abundance of apartments for sale
There are 16 apartments for sale at between £275,000 and £425,000 at Garden House, and another six from £249,000 to £340,000 at School House, both built by Fairbriar and being sold by DTZ.
They face competition from fistfuls of flats by other developers at Norfolk Grange, Connaught Place, Roedean Heights and Caverley Heights, but prices for young couples are high.
DTZ is offering home cinemas as an incentive but is open to negotiation on stamp duty and price. "It does feel slow because there is such an abundance of apartments for sale in the area. There is no point in throwing every incentive at them because it doesn't make them sell," says a sales negotiator at DTZ.
Southampton
"There are 760 finished, unsold, two-bedroom flats in Southampton at the moment, and a lot more coming up on the inside track," says an analyst.
"What we are going to see is that developers will just not go ahead with their schemes. They have got to be viable from the builders' point of view." Bloggers on the internet in Southampton talk of developers "reducing asking prices across the city" and of being "glutted with luxury, two-bedroom apartments".
At Ocean Village, planned as 400 apartments, the property consortium went bust, leaving flats for disposal and a section unbuilt.
Countryside Residential has at least five flats to let here at between £650 and £795 per month.
John Denham, Labour MP for Southampton Itchen, has spoken out in support of residents and against "over-development of the area". "All we get is flats, more flats and neglect," he says.
400 apartments were originally planned for Ocean VillageLeeds
According to Knight Frank, 3,655 new homes have been completed in the past decade, 2,408 are being built and a further 4,808 are stacked on the runway.
Most will be flats. In the past two years alone, 2,200 units have hit the market. But Allsops estate agency, based in Leeds, reports that demand for flats this year has not come from owner-occupiers but from investors who often buy in bulk and depend upon lets.
There have been 120 one-bedroom and 96 two-bedroom flats at Clarence Dock, which, together with hundreds more at Mayfair's City Island and Barratt's Brewery Wharf, makes a "considerable influx of new flats to rent" in the coming years. "The ability of the rental market to absorb so many will be severely tested," says Allsops.
Nottingham
The market in some areas is "peaking", according to a study just published by Nottingham Trent University. This is particularly true of the Lace Market, "where there is an oversupply of rented housing".
The report, which consulted all the major agents in the city, notes that in the past few years 5,000 units have come "from nowhere", with sales driven by investors and young, affluent buyers. There is concern now that this market has "overheated" and there are a lot for sale.
Hometrack has charted how the pulling power of new flats in the city centre has dropped.
In 1998, the average value of a new flat in Nottingham was £169,055, and 160 were sold at a premium of 207 per cent over old property.
Since then the sparkle has steadily faded - last year the average value of new flats was £137,246 on 948 sales, with a premium of just 4 per cent. "Basically, the new flat has hit a price ceiling," says research director Richard Donnell.
Bristol
There are 1,900 homes being built, 4,200 more in the pipeline (with planning permission), and 2,000 on the drawing board. Hundreds of flats are for sale off-plan or being built now.
Through Knight Frank alone there are 60 flats at City View, of which 22 have sold; in Eminence Street, there are 14 rooftop apartments, of which two have sold, and Unity Street has a further 49, of which seven have sold. Prices range from £110,000 to £350,000.
The Bristol development where the Blairs bought two flats
Bristol stands second from the bottom of the Hometrack pulling power league table (after Nottingham), with new flats commanding a premium of just 5 per cent. Builders are beginning to offer incentives. Westbury was recently offering £10,000-worth of sweeteners (stamp duty, carpets, curtains, deposit or holiday) on properties at its Trubshaw Gardens site.
Cardiff
Cardiff Bay has new flats coming out of its ears, some finished and some selling off-plan.
At Prospect Place, there are 850 (400 sold), priced at £260,000 upwards. At Admiral House there are 140; at Victoria Wharf 510 (154 sold) one-, two- and three-bedroom flats at £189,500 to £280,000.
Cymric House has another 49 (32 sold) one- and two-bedroom units at £155,000 to £405,000. There are many more.
"Cardiff Bay couldn't have happened without flats," says Catherine Maunder, of Knight Frank.
"It went from a working dock with rundown houses to an affluent, aspiring place and nearly all of it is apartment blocks. But we are always asking developers to build houses because there are a lot of professional couples with babies now who just want a house.
The next level up for buyers has been overlooked." Many of the developments have been "bog-standard boxes", but first-time buyers now can't afford the prices. "It is a difficult moment in Cardiff, certainly," she says.
Manchester
"Northern cities have been transformed by the building of flats," says Liam Bailey, of Knight Frank.
A part of Manchester's transformation: Number One Deansgate, Manchester
"But the fact that there are a lot on the market not selling, and a lot in the pipeline, is unfortunate. The market will eventually mature. If you are reinventing cities, you will gets ups and downs."
Here 5,949 units have been finished in the past decade; l3,427 are being built and a further 4,100 are in the pipeline with planning permission. But the city council is trying to attract families and has given Taylor Woodrow permission for townhouses and a crèche at Macintosh Village.
Liverpool
Nowhere has grown faster. A decade ago just 2,500 people lived in the city centre. Knight Frank says this has grown by 400 per cent to around
11,000. There have been 3,523 new homes coming on stream, 3,049 are now being built and 1,548 more have planning permission.For sales negotiators, it can be like being a rabbit in the headlights. Kevin Whittaker, who has been marketing123 flats in The Albany, still had 65 left to sell last February.
By November, the figures had whittled only to 58, even though he is offering a trial rental period of six months, guaranteed two-year rental for investors, and available cash-back deals. Prices are £168,000 for one bedroom and £218,000 for two.
"We are trying to come up with new ideas. Buyers have an awful lot to choose from in Liverpool. It can only get worse, as there are many more flats coming to the market by 2008," he says.