Buy To Let Market Falls Into The Brown Stuff
LOOKS like the buy to let market in the UK is in freefall:
The buy-to-let market is in crisis as 40 per cent has been wiped off the value of new purpose-built investment properties in the past year, a survey by The Daily Telegraph has found. (…)
A study of nearly all the new-build flats that have come up for auction in recent weeks shows they are selling for, on average, just 60 per cent of what property investors paid for them.
While official figures suggest that the UK property market – including buy-to-let – is in fair health, there are growing numbers of new-build flats being repossessed in cities such as Manchester, Leeds, Birmingham, Norwich and Nottingham.
This isn’t, actually, quite what it looks like. Would you believe that it’s the Government at fault here (although those losing money shouldn’t be looking for any compensation of course)?
There’s been an insistence from Whitehall that new housing must be built (as far as possible) on brownfield land and to a high density. This has translated into local councils happily giving planning permission of developments of flats, and not so much, if at all, for houses. We’re thus seeing an excess of flats appearing on the market as opposed to the houses which we Brits traditionally prefer to live in.
Now whether it’s a good thing or not that we should all go and live in flats like Continentals is something quite different from the fact that if the new housing going up is the stuff that people don’t actually want to live in then the relative prices need to change.
This isn’t the housing market falling by 40%, nor is it the buy to let market falling by that much. It’s that the planners have approved more flats (and fewer houses) than the buyers actually want. So the price of flats is going down relative to the price of houses.
Posted: 1st, October 2007 | In: Broadsheets, Money Comments (3) | TrackBack | Permalink
