City of Culture award fails to sustain Liverpool momentum
For several years Liverpool had been the darling of property investors wanting to cash in on its status as European City of Culture 2008. But now that the big year has arrived celebrations are turning to commiserations, because property prices are falling.
Initially, Beatlemania did turn into house price mania. According to Halifax Bank, the city's residential property values doubled over five years from an average of GBP78,639 (HK$1.22 million) in 2002 to GBP156,715 last year. However, the credit crunch and overbuilding mean prices are falling now, property experts say.
Liam Bailey, head of residential research at Knight Frank, said there was an oversupply of city centre flats in Liverpool.
'Liverpool like all the big Midlands and northern cities is having a sticky time,' he said.
'Lots of the developments are a bit 'samey', one- and two-bedroom flats. It has definitely weakened. There have been price falls.'
According to Ann Lever, the head of Liverpool residential development at Knight Frank, prices for new-build homes coming onto the market now are between 5 and 7 per cent less than for comparable properties marketed two to three years ago.
She said sales and enquiries were down from a year ago.
'The banking issue is giving developers concerns about starting new developments and those people who want to buy lack the ability to do so, because they can't get credit.'
She said sales remained strong at high quality developments in good locations, such as Liverpool's waterfront. Liverpool estate agents, Sutton Kersh, forecast price falls of 20 to 25 per cent for city centre flats and falls of 10 per cent for suburban homes by the time the credit crisis ends.
'We have had a little bit of informal criticism from other estate agents for telling the truth,' said James Kersh, a director of Sutton Kersh. 'Vendors have to realise that prices are not as high as they were.'
However, Ms Lever said city centre flat prices would not collapse, because developers would build fewer units in response to lower demand. Less than 1,000 flats would be completed this year, she forecast.
According to housing intelligence business, Hometrack, Liverpool rents fell 2 per cent for two-bedroom properties between the first quarter of last year and the first quarter of this year, because of overbuilding.
But estate agents said the city's rental market had benefited from the sales downturn, because would-be buyers were renting instead. 'Rentals are a huge boom area of our business,' said Mr Kersh. 'Rents are 1 to 2 per cent up over the last 12 months.'
House prices in Liverpool have doubled over the past five years
Liverpool estate agents, Sutton Kersh, forecast price falls for city centre flats of up to: 25%