New report from City Residential reveals supply of new homes for sale and rent in Liverpool city centre has hit a 10-year low which is likely to lead to higher prices and rents. Tony McDonough reports
There is a chronic shortage of homes to buy and rent in Liverpool city centre as supply hits its lowest level in 10 years, a new report reveals.
According to property agency City Residential, the the stamp duty holiday, issues around the replacement of cladding and soaring rental and sale prices in the suburbs have all combined to squeeze supply in the city centre.
And in his latest quarterly report, Alan Bevan, managing director of City Residential, warns both rental and sales prices will be pushed higher as a result. He explained: “Whichever way you look at it they are only going one way – upwards.
“Sales prices have increased dramatically over the last six to 12 months and the reduced supply and increasing demand is only going to push prices higher. It is interesting to point out however, in comparison to the suburbs, the average prices of apartments in the city still appear to offer real good value for money even after the recent increase in prices.”
In his report on January, Alan said multiple COVID-19 lockdowns had prompted an exodus out to Liverpool’s suburbs. With many city centre shops, bars and restaurants closed many people wanted to move out of the city centre.
He added: “COVID has had a huge influence on where we find ourselves today but not as you would expect. During 2020 we heard many commentators predict “the end of the cities and highlighted how this would push tenants and buyers into the suburbs, which is exactly what happened.
“By doing this both house prices and rental prices have boomed in suburbia. It is almost near impossible to find something to rent in the suburbs and buying a house at a reasonable valuation isn’t far behind.
“Facing an almost impossible task of trying to find somewhere to live, hundreds – if not thousands – of tenants and buyers have therefore had no choice but to look at renting/buying in the city, irrespective as to whether this was the first or even preferred choice.”
Alan believes the biggest impact will be on the city centre rental market. New developments, such as the 34-storey Moda Living scheme at Liverpool Waters, have come onto the market but stock levels remain low and this could see a rise in rents.
“Liverpool is one of the few northern cities that has seen slow/steady rental growth rather than explosive growth over the last three to five years – certainly in comparison to places such as Manchester and Birmingham,” he said.
“With almost no stock left in the market rental prices may well increase sharply over the coming six to 12 months, especially on renewal of tenancies/when an apartment becomes vacant.”
With the city recovering from the COVID shock and, as Alan describes, now “firing on all cylinders”, he expects demand for accommodation to continue to be strong. However, as new stock comes onto the market he expects prices and activity to moderate.
“The administration of some of the YPG stalled schemes will continue to affect many investors view of the city and question their potential investment plans,” he added. “Although the restarting/recovery of some previously stalled schemes (many by Legacie) may well offset this issue.”
Legacie is well advanced on its £90m Parliament Square scheme which will deliver 500 apartments in the Baltic Triangle district. And last week the company also agreed a deal to take on the collapsed £250m Elliot Group Infinity scheme close to the commercial district, comprising 1,000 apartments.