Repossessions on rise as banks ‘shake tree’

Alan Bevan, managing director of City Residential, the Liverpool estate agent, said he saw a surprising rise in the number of repossessions in the first quarter of 2012.

Bevan, in the latest of his quarterly market reports , said: "Whilst we expected to see [the increase in repossession levels in quarter four of 2011] continue during 2012 we have been a little surprised by the number of apartments that have been brought forward in the quarter.

Although there are a couple of large repossession portfolios that have come to the market there also appear to be more lenders looking to offload non or under-performing assets. A lot of Irish clients who have bought in the city over the last 10 years are also coming under pressure from both Irish and UK lenders to refinance their portfolios; something we know is very difficult to do in this market."

Bevan added: "Although there is strong interest in the city from investors (mainly due to rising yields and strong rents) we cannot afford to see a much higher level of repossessions flood the market as this will no doubt destabilise the reasonably good level of supply and demand.

"Interestingly whilst investors are still struggling to raise suitable levels of funding, other buyers are continuing to take up some of the slack. We are continuing to see cash-rich parents buying city centre apartments for their sons/daughters studying at university rather than allow them to pay rents over to another landlord. Certainly with savings rates continuing to offer a poor, and negative in real terms, return you can understand the logic behind this. First-time buyers are also appearing but they are still a rare item in a market where they should be buying practically every property under £100,000, which they would be if there were genuinely good levels of mortgage funding available."

Bevan continued: "We highlighted last quarter that activity levels in December/January had surprised us and indeed had actually got us a little excited that maybe we had seen the bottom of the market.

"Unfortunately these interest levels dropped a little towards the end of the quarter on the run up to Easter and are now back to where they were during autumn 2011. We still believe that the market is unlikely to fall much further but will drift along the bottom until a catalyst for improvement appears.

"So will 2012 be the year of the repossession? It's probably a little too early to say and is definitely not what the market needs right now. There is no doubt some of the banks are definitely 'shaking the tree' and will no doubt increase supply but let's hope that it does not create a momentum that other banks/lenders feel obliged to follow."

Bevan said the average sale price for a city centre apartment was £134,480 in the first three months of 2012, down 7% on the same period last year.