UK Money News
31st March 2008
Price of new build flats dips 26%
Prices for new build flats have slumped over the last three years, it has been revealed.
According to a study conducted by Allsop the average value of a new build flat has declined by 26 per cent between January 2005 and February 2008.
This has resulted in just 3.7 per cent of all new builds flats sold at auction making a profit, the auction giant said.
The apparent slump is set to hit buy to let landlords especially hard many of whom had invested in new build flats in anticipation of increased demand for rental accommodation.
Gary Murphy, a partner at Allsop, said: "Many developers specifically tailored apartments to attract the buy-to-let market, with investors being offered incentives including cash refunds or guarantees initial rental returns.
"Lenders, keen to win market share, designed mortgages to appeal to investors, often offering high loan-to-value products at reduced initial rates of interest.
"However, with large numbers of units coming onto the market and with limited tenant availability, investors suffered voids almost immediately."
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