First-time buyers are starting to return to the Liverpool city centre residential market amid falling interest rates and sky-high rental costs, a local expert says. Tony McDonough reports
Liverpool city centre is starting to see the return of first-time buyers to the apartments market amid falling interest rates and the high cost of renting.
In his quarterly snapshot on the local market, City Residential managing director Alan Bevan says that with inflation now back below its 2% target there are signs that mortgage rates may now have peaked.
Over the past two or three years demand for rental apartments in the city centre has soared and that has sent rental levels rising rapidly. A year ago Alan was reporting rents rising by as much as 12% as developers scrambled to meet the demand.
This has seen a number of rental-only developments come onto the market but Alan says the pendulum is now starting to swing back in the other direction.
In the report he writes: “As we have highlighted in previous issues the sales market has been hugely impacted by the rise in interest rates and the challenges of the cladding/Building Safety Act
“During the last six months we have seen a continuation of the noticeable improvement in sentiment with sales performance up around 20% in comparison to last year.”
He explained that prices for investors in the city continue to look attractive compared to those of the suburbs and other UK cities. With yields in some cases hitting 15-year highs prices now seem “good value”.
“It appears that both inflation and interest (mortgage) rates have now peaked for the foreseeable future with both rates falling substantially during the last nine months and inflation now below 2% for the first time in three years,” he added.
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“We are beginning to see an increasing interest from first-time buyers entering the market. Although mortgage rates are higher than a few years ago, the dramatic and sustained rise in rents is beginning to force some tenants to consider buying instead of renting.
“There continues to be reasonably low levels of supply in the sales market, so we are not seeing a ‘glut’ of unsold properties struggling to sell as in previous challenging conditions.
“This is beginning to change however as buildings impacted by the cladding issue/Building Safety Act begin to become saleable once again.”
In his latest report, which you can read by clicking here, Alan also offers an explainer on the Government’s Renters Rights Bill and what it may mean for landlords.