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Flat market

• Evan Davis | Notes on Real Life |
• 26 Feb 08, 09:13 AM

Have we overdone it with city centre flats?

Or apartments as they are often called in the sales literature.

Arrive at almost any railway station - from Norwich to Nottingham - and you can't help but be struck by how many new blocks have appeared.

But there's some evidence the flats are not selling.

The tallest residential block in Britain is Beetham Tower, the iconic Manchester building that opened less than two years ago. Some colleagues of mine have found fifty of the flats in there are now on sale - getting on for a quarter of the 220 built.

The bulk were bought by investors hoping for capital gain. They can reportedly still get tenants to rent them out, but capital gain will be harder to come by if they try to sell them with so many others doing the same thing down the corridor.

In Leeds too, the situation is said to be bleak.

has reported that a thousand flats lie empty - but many thousands more are in the pipeline to be built. One can only assume most will never be constructed.

And you don't have to go to big cities to find stories of the flat phenomenon going too far.

In Colchester, one surveyor told the latest RICS lettings survey that there are signs buy-to-let investors failed to do their homework; they believed unrealistic valuations. Investment clubs have been a problem, and surveyors acting for them had better watch their backs, he said.

Another interesting piece of evidence is that housing associations are reportedly being offered new flats for social housing - at discounts of about 15%. A reversal of the principle of council house sales.

All in all, flats have been where the property market action has been most extreme over the last decade - prices have risen faster there, speculators have invested more in them, homebuilders have constructed them in ever larger numbers.

It suited the authorities, who produced numerical targets to build more dwellings…never mind how large they are.

And there was an apparent economic logic given the growing number of single person households.

Alas, it seems that the new singles are not urban youngsters enjoying a latte on the balcony as depicted in the hoardings. They are elderly widows and divorced dads, who aspire to having a family home with a garden.

And now the market seems to have turned against flats more ferociously than other types of housing.

It's patchy and anecdotal for the moment and local conditions certainly matter.

But when the dust settles watch for blame to be attributed by some people who will have lost money…in a market not so much flat, as falling.

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