Rental levels on apartments in Liverpool city centre are likely to continue to rise despite the cost of living crisis, a new report says. Tony McDonough reports
Rents for apartments in Liverpool city centre are likely to keep rising despite the soaring cost of living, a new report says.
In his latest quarterly analysis of the city’s residential market, City Residential managing director Alan Bevan rejects suggestions of ‘peak rent’ in the city. Rental levels in the lower to mid-market have been particularly strong in the past 18 months, he added.
However, he added that rental levels in the upper end of the market – £1,000 per calendar month and above – had risen more slowly. He explained: “This can almost certainly be attributed to two issues.
“Firstly, there were around 1,000 Build to Rent apartments delivered in 2021. This nearly doubled the number of middle/upper end properties to let in the city. It has logically taken time for the market to digest.
“The second issue is the slow recovery in the overseas student market. While we are slowly but surely seeing the return of this sector, it is only over the last few weeks we have begun to experience more “normal” levels of demand.”
Mr Bevan said that while city centre rents in Liverpool had continued to rise they had not “exploded” as they had in other cities such as Manchester, Birmingham and London. The rise here, he added, had been more “gradual”.
What many commentators are now asking themselves is whether this is likely to continue for the foreseeable future,” he said. “Or we are going to see a slowdown, predominantly due to the impending cost of living crisis – rising utility bills and increased borrowing costs
“While it is reasonable to predict that we are unlikely to continue to see the levels of rent rises that we have experienced over the last 12/18 months, we do not expect to see a sharp slowdown in the rental growth rate for the next 12/24 months.
“We continue to highlight that the city offers a good choice of apartments for all budgets and tenant requirements. This is something that cannot be said of the suburbs where there is virtually nothing available to rent.
“With the student market booming back to life, and applications at the Liverpool universities at record highs, this will only further increase the demand for apartments at a greater rate than any increased supply.”
In October last year Mr Bevan warned of a shortage of new apartments in the city centre. He said the pipeline had hit a 10-year low. There has been an improvement in the picture.
He added: “Liverpool (and its residential market) has suffered in the past by having a glut of apartments at certain points in the property cycle. This has increased the supply very often when the market has suffered a recession/tough times.
“With talk of a future looming recession the focus has once again turned to the development sector to see if the current (and future) supply is appropriate for the needs of the city.
“In our opinion we do not believe that the current supply/pipeline is too high and will have a negative effect on pricing growth. In fact, if anything we would argue the current and near-term supply is probably lower than the city may need going forward.
“This is also likely to be further hindered by a slowdown in new build activity as construction costs, financing costs and high land prices may continue to inhibit delivery.”