Have city centre flat prices hit the bottom?

According to a recent report in the Times the prices of Manchester city centre flats could have reached the bottom. Some are now selling at 60% below their peak values of 2007. For example a flat in the northern fringe in the Sorting Office development which originally sold for £247k in Feb 07 is now up for auction with a guide of £85-95k. Wow - thats a hit for some poor landlord! However, because of the interest in this property auctioneers expect that this flat will sell at a premium to the guide of around 15%.

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Flow of auctioned buy-to-let properties falls
Auctioneer Andrew Wells of Allsop comments that "prices have steadied since last summer, although there is no sign of prices rising. “The good news is that there are very few city centre flats coming to the auction market at the moment,” he explains. “We have an auction next week, and out of 400 properties just one is in Manchester city centre.”


Green shoots?
With the Nationwide BS announcing that prices rose for the first time in many months in March as access to lending continue to improve. Many landlords may be smelling the green shoots of recovery.


'Churn & burn'
Nick Hancock, a corporate recovery partner at the accountancy firm UHY Hacker Young however cautions landlords about jumping in as he thinks that there may be further falls to come because many lenders practice of 'churn and burn'. This is a practice where they are desperate to get unwanted properties off their books so they sell job lots of repossessed properties at a single auction. The result is that the over supply of often similar buy-to-let property forces down prices because of the lack of sufficient willing buyers.

Go for prime
However, when evaluating the Manchester market he makes the distinction between prime city centre locations where rents and prices are holding up better than the less established fringe locations.

Property Hawk would advise landlords looking for a bargain in the city centre apartment market to take Nick's advice on board. They should seek out quality and leave fringe developments for speculators or landlords that can potentially endure periods of rental voids or further capital falls.

Uncertainty in any investment market usually produces a flight to quality, residential investment is no different.



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