Buy to Let flats amongst the worst hit in property slump
Article source: James Daley - www.independent.co.uk
Ever since the recent much publicised slump in the housing market started, city centre flats have been the worst affected with some suffering prices corrections equivalent to as much as 17 percent of their value over the last year.
According to new statistics made public by Mouseprice.com, an autonomous property analysis website, flats in the Birmingham Canal area have witnessed the biggest average drop in property values when compared to city centre flats in the Deansgate and Manchester areas that were placed in the second-fastest falling category.
The property analysis website, Mouseprice.com, said that the lately observed slumps in value were not just linked to the appeal of the location. A number of areas that have experienced the biggest drops are those where a large number of apartment complexes built over the last few years are currently standing unoccupied; developers are simply not able to find buyers to relieve their balance sheets.
Director of Mouseprice.com, Selwyn Lim, said: "Price falls have not discriminated according to how much a property cost in the first place or how desirable an area was. A clear theme has emerged, with the top 10 areas dominated by northern city-centre regeneration sites. These areas attracted the most buy-to-let investors in the boom and have recently suffered due to supply outstripping demand. But falls are not limited to regeneration areas and have spread to unexpected locations."
A Director from the independent mortgage broker Savills Private Finance, Melanie Bien, said that flats often seem to depreciated further in the midst of a housing downturn, but nevertheless emphasised that home owners and buy-to-let investors that they should not be too concerned if they are not interested in selling in the short term; implying that the prices of these city centre flats will appreciate again in the medium to long term.
In expansion she said that most buy-to-let investors do not just gamble, they are in it for the long haul and they are long-term investors. These investors, she said, view buy-to-let investment properties as another viable alternative to a pension when planning for retirement; they are therefore not in to making a quick kill, thus making it very unlikely that they will sell up even if the prices do plummet. The only problem would be unforecasted extended empty periods where there is no rental income. They would have to cover the mortgage. It stands to reason, however, that professional landlords would have factored rent free periods in to their cash flow forecasts and budgets and those vacancy periods would have been taken into account.
Several mortgage lenders have continued to pull back their cheapest mortgage products as a result of the intensifying banking crisis that seriously damaged the mortgage market. Abbey (of the Santander Group) withdrew its full range of tracker mortgage products on Thursday, replacing them with mortgage products which are a full half a percent more expensive.
Darren Cook of the independent financial sourcing website, Moneyfacts.co.uk said that there may be a sharp decline in choice but there are enough mortgage products out there for mortgage borrowers to find an appropriate deal. He added that difficulties lie with the lack of liquidity within the mortgage market and providers having no desire or capability to lend on a bigger scale. Mr Cook, in conclusion, said that mortgages are getting a little bit cheaper but the stock rooms (a reference to the range of mortgage products available) are nearly empty.
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