Property repossessions ‘may dictate Liverpool resi market’

Liverpool's residential market is mirroring most UK city centres, according to a report produced by agents City Residential.

Within its 'Residential Update' of the first quarter of the year, company director Alan Bevan states activity levels in the city centre sales "continue to be at reduced levels and are approximately 60% down on last year", but both investors and owner-occupiers are beginning "to be attracted by the level of pricing on some apartments."

The report on residential sales in the city stated:

• on repossessions/auctions prices are back to levels last seen in 2004
• some apartments bought at auction are at levels approximately 50% below the level they were purchased at the height of the boom

Beven comments: "There is no doubt that there is a much higher number of potential buyers in the market than at this time last year who would be ready to buy but are unable to secure funding or funding at levels that are at least reasonable and affordable.

"Whilst we would have expected the number of repossessions to increase dramatically, this does not appear to be happening at present. This can probably be attributed to landlords being able to hold onto their properties and pay mortgages due to the rapid decrease in mortgage rates over the last 12 months."

Liverpool's lettings market was also noted as having a tough first quarter with drop in rents of 2.84% over the first three months of the year recorded.

"Again this probably mirrors the UK as a whole and is certainly in line or better than other UK cities," said Beven.

He added: "A slightly more concerning element affecting Liverpool city centre is the large number of apartments that have been released in the first quarter by developers, banks and administrators."

Beven mentions schemes such as Alexandra Tower, One Park West, Elysian Fields, West Tower, The Albany and Park Lane Plaza as the large schemes that are now available to rent, which have caused "a depressing affect on rental values".

In summary, Beven does not believe there will be any significant market recovery during 2009, but can forecast more interest from potential buyers.

He concluded: "Although the funding issues are starting to subside slowly we cannot see a 'normal' funding environment for at least another 12 months. The issue of repossessions my well dictate the future direction of the market over the next 12 months.

"Our concern is that with falling prices loan to value rates are dropping all the time and many city centre apartments are now in negative equity.

"If mortgage rates increase or values continue to drop then the potential for more repossessions will increase. Logically this would have a downward pressure on prices.

"The tight market conditions will almost certainly result in no new residential units being completed in the city during 2010-2013 and potentially much longer. This will help tip the balance of supply back towards equilibrium at a time when both the city and the country is emerging from recession."