City Residential: Sales exploding back into life
Alan Bevan's latest quarterly summary of the apartment market in Liverpool city centre shows a 250% leap in reservations compared to last year.
Q3 highlights
Sales
- Prices up 1.85% on quarter, 2.27% on year
- Sales activity booming encouraged by Help to Buy
- Real stock shortage with very low levels of suitable supply
- Potential for new build developments taking advantage of better market conditions?
Lettings
- Prices up 1.4% on quarter, 0.77% on year
- City runs out of stock for fourth consecutive year
- Demand as strong as ever despite concerns over increased student supply
- City continuing to attract more residents
- Huge amount of potential Build to Rent/PRS activity
Residential sales
We highlighted in our Q2 report published in July that market activity had accelerated rapidly from a quiet start to the year and this has continued through Q3 where activity levels have exploded into life.
Although this will take some time to feed through into completions and recorded price increases we are experiencing reservation levels that are approximately 250% up on this time last year. Our sales pipeline is 280% up on where it stood at the end of September 2012.
Although we have reported a very impressive overall price increase for the quarter of 1.85% this in no way reflects the change in the market conditions over the last three months. The positive news locally appears to be backed up by the national figures with increases of 2% Lloyds/Halifax and 0.9% Nationwide respectively.
Whilst we are all aware of the basic reasons for the rise – low prices, strong yields, affordable finance – it has been the introduction of Help to Buy that has ignited the market from its low base. Although the second phase of the scheme has only just commenced and it was originally proposed to begin in January 2014, the anticipation of the introduction of the scheme has been enough to encourage a surge in sales activity. Many buyers, both owner occupiers and investors, have decided to take the plunge and purchase before the introduction of the scheme and in anticipation of future price rises.
Coupled with low prices it is of little surprise that the market has bounced so dramatically off its low levels seen earlier in the year.
The news of an increase in sales activity is already starting to filter through to developers and landowners. Whilst we are unlikely to see a huge return of speculative development there may well be some schemes brought forward taking advantage of the better market conditions.
- Alan Bevan is managing director of City Residential
- To see the full report visit the City Residential website
