I’ve never got the appeal of living in town. People say that it’s easier and it works out cheaper and you’ve got the bright lights on your doorstep. But when I lived in town I missed the greenery and the birds and the pints of milk.

Yes, Tesco is encroaching on every element of our lives, but there are still parts of town that will require a 30-minute walk to the nearest purveyor of Hovis, bog rolls, bacon sarnies or The Guardian.

But it gets worse because, as we all know, Liverpool is a ghost town of deserted apartments and half-finished skyscrapers – like some Ballardian, Burgessian nightmare – with nary a post office nor restaurant in sight. We know this because the newspapers told us.

That’s certainly the received wisdom about the city’s new living space. Ask anyone. They’ll tell you that the city centre is full of empty flats – unwanted and unsold like so many Torres shirts.

But is it actually true? We decided to do a bit of digging to find out exactly what the truth is about the city centre’s accommodation as part of a series this week about living in Liverpool city centre.

“There is a total of 361 flats available in L1 and L3 at the moment, compared to the 3,000 some 18 months ago,” said property manager Ben Davis of Davis Beyga Estates, speaking to us in early March.

“The average price is £700pcm for the two-bedroom flats; most are to rent and sale at the same time as people need to cover the mortgage as soon as possible.

“The rental demand outstrips the supply by about three-to-one and I was amazed that there are that many still available.”

So, that’s that cleared up, ostensibly. But rewind five years and there was a very different picture.

Supposedly new apartments were springing up in Liverpool at a rate of almost 20 a week between 2002 and 2006 during a housing boom fuelled by cheap credit, buy-to-let and the return of thousands of residents to the city centre after an exodus in the 80s.

Supply – driven by the expectation of a new Liverpool influx off the back of Capital of Culture and gushing Sunday supplement articles – soon outstripped demand in the city, with figures ranging between one in ten and one in three city centre dwellings lying empty bandied about as recently as three years ago.

One half of Liverpool’s 27,000 new-build apartments were apparently unoccupied in the middle of the last decade, with suggestions that the glut of one- and two-bed apartments were creating capacity where no demand existed.

That surplus demand drove down prices, which led to so-called ‘buy-to-leave’ investors snapping up flats to leave empty as an investment, assuming they’d appreciate in the housing boom. This had two unwelcome effects in Liverpool: first-time buyers were frozen out; and properties all over the city were left vacant.

A lack of tenants or live-in owners meant no accompanying money coming into areas, which meant no auxiliary businesses springing up nearby or investment in nearby infrastructure, which led to a number of virtual ghost towns around the city. Liverpool started to resemble one of those Spanish urbanizacions that consist solely of roads laid out in grids, waiting for villas that never came.

A decrease in owner-occupiers and a rise in rented accommodation – and the less cohesive communities that inevitably develop – meant the city’s apartment blocks often seemed cold and impersonal; dark from lack of night-time lights in empty apartments and neglected by stay-away owners.

Unlikely salvation – of a sort – has arrived in the shape of the credit crunch, which has led to more flats being occupied rather than less. Investors who bought up city apartments in the early-to-mid parts of the decade have now been forced to move into them or rent them out to meet the cost of mortgage payments.

“Since the property crash, there have been a high number of repossessions where many apartments have been sold at a very low price,” says mortgage adviser Kerry Duncalf.

“The market was already flooded with apartments in the city centre so the prices there were hit more severely when the housing market went into its decline.

So, is this finally a good opportunity to get onto the housing ladder in the city centre? Duncalf thinks so.

“When the prices fell many investors and buyers had their fingers burnt as they had bought off-plan, exchanging contracts before the apartments were built.

“In such arrangements the buyer is legally bound to proceed with the purchase. When they completed their sale the prices had fallen so much that they were already in tens of thousands of pounds worth of negative equity and had to raise the funds to make up the shortfall.

“I believe that these are the properties that should be snapped up. I have been amazed by some of the prices that have been agreed on them. ”

The problem is, no-one’s buying. Spooked by the dicey housing market everyone is turning their attention to renting, meaning a squeeze on available rental apartments in the city centre. Meanwhile, those investors who did manage to hang on to their investments did so by sub-letting or turning their flats into serviced apartments, often let to stag or hen groups.

This drives down the desirability of such apartments, with buyers preferring developments with higher proportions of owner-occupiers, according to a report last year from agents City Residential; a self-perpetuating cycle.

And it’s not just the credit crunch that has led to a surge in demand, according to Ben Davis.

“The reason there are now so few flats available because student housing has priced itself out of the market, so it’s cheaper for students to get together, take a three-bed flat in town and not have the hassle of moving stuff from one site to the next.

Indeed, students now account for the vast majority of city centre residents, thought to account for two-thirds of the estimated 30,000 people who live in Liverpool city centre. Less owner-occupiers. More tenants. And there are more reasons why Liverpool’s hive of city centre apartments may not attract the desired or expected number of buyers.

“Apartments will only ever attract certain buyers, generally people with no pets and no children,” says Kerry Duncalf.

How many affluent, childless, petless property buyers who want to live in Liverpool city centre are out there?

Either way there’s a new raft of new accommodation, such as Liverpool Waters, planned for the near future that will further extend the number of available properties in the town centre.

Currently Liverpool has hardly any free accommodation, if you’re renting. There are apartments that are empty waiting to be snapped up by buyers, but buyers are thin on the ground.

It could be argued that we’re on the right side of the supply/demand equation, but the current situation only came about because investors got stung when the economy fell off a cliff.

Without the credit crunch Liverpool city centre would still be full of empty apartments owned by investors living in the suburbs, or another city, region or even country. Following the recession, Liverpool’s property market has been transformed by students spooked by high student accommodation prices and tenants wary of an unpredictable housing market – a happy accident at best.

But where the market goes next – and where all the new skyscrapers on the drawing board and city’s volatile residential mix fit into that shifting dynamic – is anyone’s guess.

Tomorrow we take a look at St Paul’s Square, which boasts a shared equity scheme at a new development in the business district.

Davis Beyga Estates

Second image by failing_angel

5 Responses to “High Rise”

  1. Fantastic article. Very interesting. City centre rents were fairly low a couple of years ago but it’s now getting towards high (for the north) Manchester prices. I know a lot of people who’ve decided to move to the suburbs just because city centre letting is too much of a hassle or too expensive.

  2. Interesting read, although that rentals are booming isn’t a happy accident, it’s just the natural conclusion of what happens when sales don’t. It’s the same dynamic in any area.

    Most students in the cc actually live in student accommodation (although I know there are a couple of blocks with large numbers, but these are in effect ‘purpose built’, since that was who they were aimed at), so the large number there distorts facts. I would say in fact that there were far more students living in city centre flats a couple of years ago due to a student housing shortage, which no longer exists due to some new units being constructed. Due to rising rents, students will find much better value elsewhere again now.

    So many people renting says that there certainly is a market for flats, and maybe when people can afford to buy again some of these people will stay. Certainly, for older people, city centre living with accessibility and amenities and good neighbourly communities, it’s ideal really. I’m not older, but I am certainly one of the many different types of childless people who intend to stay that way, and am quite happy being here, and we all need somewhere we can call ‘home’.

    PS. Although it’s a common rental stipulation, for ownership many cc flats do allow people to keep some pets at least!

  3. I was driving at the fact that many of those flats were built with owner-occupiers in mind that ended up being bought up by buy-to-leave investors and subsequently sub-let. I’d say it’s preferable that there’s people in them than not, which is where the ‘happy accident’ thing comes in. Were it not for the downturn there’s a good chance those thousands of flats could still be empty while investors count their returns.

  4. TBH I’m not convinced that many of them were actually built for owner occupiers – developers like most companies are only interested in the money, and the temptation of building to satisfy the ‘demand’ of pension funds buying job lots of flats to leave and accrue was probably far more tempting to them.

    But yes you’re right, it is a happy accident in that way that lots of people are now living in these that maybe wouldn’t have otherwise.

    Also, when the buy to leave investors have made up their losses (through a combination of market accrual and rental income), they’ll be looking to dispose of these ‘investments’ (or at least minimise their exposure through shared ownership), and existing tenants will be a prime market, having being able to sample city centre life and being able to get their hands on a home at a more reasonable price.

    Perversely, the ‘buy to leave’ boom and bust is likely to end in a massive boom in city centre home ownership in a couple of years time.

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