City Res: Student lettings prop up flat market

Alan BevanLiverpool city centre apartment prices fell in the third quarter as the number of distressed sales accelerated, writes Alan Bevan, managing director of Liverpool agency City Residential in his latest regular market report.

Here is an edited extract from the City Residential Q3 2012 report, published in association with Paver Smith, which you can download in full here:


  • Prices down -1.44% on quarter and -4.20% on year
  • Accelerating increase in number of distressed landlords being forced to sell.
  • Low transaction levels continuing to hold back market
  • Completions better for the quarter but all time low for the year to August 2012

The residential market in the city centre does not tend to conform to the seasonality you see in the suburbs but the summer months of July, August and September appeared to mirror the traditional seasonal slowdown. Low transaction levels and the continual sideways/downwards drift of pricing left city centre agents thankful they had lettings to rely on.

Whilst the figures from Halifax (prices down 0.5%) and Nationwide (prices level for the quarter) provide a reasonably stable view for the general market in the North West we have seen prices come off a little more strongly in Liverpool city centre for a variety of reasons.

On the subject of transaction levels we continue to see extremely low levels of activity as a percentage of the overall stock. Any competent expert will tell you that without decent levels of activity you are likely to drift sideways or slightly downwards and indeed this is what is happening at present.

Our main concern is trying to see what catalyst there is in the market to increase these levels of activity and stabilise prices or even start to see some growth.

The positives in the market remain the same with buyers looking to purchase the better quality apartments in decent schemes. There is no denying that the city centre continues to attract people who genuinely want to experience city centre living. As with any buyer though they are choosing those apartments which offer the space, location, specification and environment that is appealing to owner-occupiers rather than tenants.

Also this quarter, and on the theme of quality assets, we are delighted to see that the sale of West Tower has finally completed, bought by London-based Delph Property Group. Their first purchase in the North West highlights the attractiveness of a high quality trophy style asset to residential investment buyers both in the UK and abroad. With a couple of other large residential schemes in Liverpool struggling to find buyers it reiterates the importance of holding quality assets over some of the higher income producing secondary ones.


Whilst we all look forward to welcoming back 50,000 students to the city every year there is an element of dread that the rising fees, higher levels of student stock or general economic conditions will hold back the market. This anxiety was probably magnified by a higher level of move-outs in May/June this year compared to 2011 suggesting that some tenants were reviewing their accommodation needs.

Despite these concerns once again the market has performed unbelievably well with available stock levels at an all-time low. Indeed even with our large portfolio we found ourselves running out of apartments to let by the middle of September rather than the usual low point of end September into early October. In fact the demand put a huge amount of pressure on trying to turn around apartments between tenancies as desperate tenants were signing up for apartments where the existing tenants were not vacating until September.

It's not just about students, however, with an ever increasing number of local employees and local first time buyers who are unable to buy and older tenants keen to experience what Liverpool city centre has to offer.

With all this positivity surely there has to be something on the horizon that is concerning us and some of the other experts in the city. That concern is probably best directed in the direction of student development. We are seeing a huge increase in the number of student schemes being built and proposed. Relative to what we are seeing in other northern cities we would suggest that we are looking at a potential over-supply situation.

There is no doubt there will be some casualties of this building boom and we would suggest that the first to suffer may well be the landlords holding older stock in secondary locations in the city. We are often asked if we think it will affect the city centre lettings market and to be honest it is difficult to say until we know if everything that is proposed gets built. If it does then there will be some effect but we would like to think that when this time comes we are starting to see some capital uplifts to compensate.

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