|Price of flats still falling
But it’s not all doom and gloom says Rob Griffin
A SHARP rise in the number of empty flats across Britain is starting to take its toll, with values tumbling.
The average price of an apartment fell 0.3 per cent over the festive period, according to our exclusive Sunday Express/ propertyforecasts.co.uk data.
And further falls are predicted over the coming months as a result of the over-supply which has been triggered by a glut of new developments.
Mandy Bradley, director of propertyforecasts.co.uk, admitted this was partly to blame for overall house prices edging up just 0.8 per cent over the past month.
But she believes the situation is only temporary and is confident that it won’t lead to long-term problems for the rest of the property market. "Flats and maisonettes are expected to slightly decline in value over the next month because the number being built has substantially increased availability," she said.
"However, our forecast for overall house price growth in 2006 still averages around 6.3 per cent, although this will vary according to region and property type."
One of the regions badly hit by the oversupply problem is the North West, which includes Liverpool and Blackpool, where values have fallen by more than three per cent in the past month.
This means the average flat in the area is now worth around £121,876 - more than £4,000 down since the beginning of December 2005, when they were selling for £125,889.
It has been a similar story in the North East, which includes Leeds and Hull, where falls of 1.5 per cent have meant values slipping £1,789 from £114,741 to less than £113,000 over the same period.
Mark Worley, manager of Sanderson Young estate agents in Gosforth, Newcastle upon Tyne, said there were huge numbers of apartments available in the area but little in the way of three-bedroomed semi-detached homes, which are the properties in demand.
"There’s been a bit of over-supply in flats and we’re currently inundated with them," he said. "Whenever there’s a bit of spare land someone builds a block of flats on it and this has dramatically affected the market. A lot of these flats are empty."
Apart from the downturn in flats, the rest of the property market appears to be in relatively good shape. The average values of UK semi-detached houses, for example, have increased by more than two per cent since December, while terraced and detached properties have nudged up 1.39 per cent and 0.2 per cent, respectively.
The encouraging news looks set to continue with overall UK house prices expected to be up by around six per cent in a year’s time. Even the depressed flat market should recover lost ground as long as new developments are kept to a minimum.
Estate agents are particularly upbeat. They claim that decent numbers of potential buyers, relatively low interest rates and attractive mortgage deals are giving them reasons to feel optimistic going into the new year.
The Council of Mortgage Lenders has also helped boost confidence levels by revealing that gross mortgage lending was up five per cent to an estimated £28.5billion in November, an increase of 30 per cent on the same period in 2004.
Robert Wells, who runs a property agency of the same name in Norwich, said that although selling prices were probably slightly down on a year ago, the prospects were looking far better for 2006.
"We are seeing very strong demand across the board and most properties have held their value well," he said. "At the moment we think there will be modest increases in value of between three and four per cent this year."
Over the coming year, Wales is expected to enjoy the fastest rate of house price growth, with seven per cent rises forecast for semis and terraced properties, taking their values up to £145,910 and £119,215, respectively.
Detached homes in the region, meanwhile, could increase by as much as 8.5 per cent, which would see them changing hands for more than £230,000.
Elsewhere, Scotland is also on track for price rises. While average values have only gone up by 0.6 per cent over the past month, increases of around 5.6 per cent are expected to have taken place by January 2007.