Leeds property sector enjoying boom - YEP

20 August 2008


http://www.yorkshireeveningpost.co.uk/news/Leeds-property-sector-enjoying-boom.4408629.jp

PROPERTY sales might be falling through the floor but lettings of city-centre flats are going through the roof, according to agents in Leeds.
While less than a year ago forecasters were warning there would be a huge oversupply of apartments in the heart of Leeds, since the credit crunch put the brakes on many schemes, the city's letting agents say there could well be an undersupply.

Demand

And it looks like the days of a flat in Leeds being seen as a cheap option could soon be over, as rents rise in line with the increasing demand for a limited number of homes.

Jonathan Morgan, of Morgans City Living, said lettings with the firm were up between 30 and 40 per cent on last year. He has recruited extra staff and extended opening hours to cope. Mr Morgan, the first estate agent to deal exclusively in the fledgling flats market 11 years ago, said: "People recognise that at the moment if they are serious about moving they are making very quick decisions because if they don't, flats they look at have gone and they have to go back and start looking again."

He added: "Believe it or not the challenge we may face in five years time is undersupply."

As revealed by the YEP, thousands of homes planned for the city centre have been axed. The credit crisis has pushed up the cost of mortgages and first-time buyers need to find deposits of 10 or even 25 per cent to get the best rates from some lenders – equating to more than £30,000.

Mr Morgan said a random sample of 80 Morgans properties had shown rents had risen 2.5 per cent between April 2007 and April 2008 and that was expected to increase to around four to five per cent this year. A typical one-bedroom flat without parking in Leeds city centre is now a minimum of £600 a month, while a two-bedroom pad with parking is £825 upwards.

Hayley Miles, sales and lettings manager for King Sturge, Leeds, said this was the first year the firm had offered a lettings service but it was three times busier than expected and rents were starting to rise. She said: "There's always been talk of an oversupply in times gone past but in fact we still have few properties in Leeds city centre compared to other cities." Miss Miles added: "The future development pipeline has dramatically reduced due to the mothballing of a number of high-profile schemes so there's going to be less stock coming on the market over the coming years."
She said: "If the letting market continues to boom the way it is, it's conceivable that the demand could outstrip the supply."

Record

James Douglas, of Leeds city centre online estate agent nest, said the firm had had its best year yet, taking on extra staff to cope with demand and reporting record profits.He said: "nest is open seven days a week – til 8pm five days a week.
"This year we are up probably 35 to 40 per cent compared to last year."

Mr Douglas, 29, said: "People who had put aside £800 or £900 a month for a mortgage are thinking they're not going to get that mortgage but they're still aspiring to live in nice properties even now they can't buy them." He added: "Now that we are having to work with what we've got to hand there will be an undersupply."

Andrew Carter, deputy leader of Leeds City Council and executive member for development, said the vacancy rate for city-centre flats was around 11 per cent, which he described as "pretty good". Estate agents sold an average of 15 properties in the three months to the end of June, figures from the Royal Institution of Chartered Surveyors (RICS) show.

That is nearly 40 per cent below the same period last year and the lowest figure since records began in 1978. Even during the depths of the 1991 housing crash agents sold 26 properties in any three-month period.

The Royal Institution of Chartered Surveyors (RICS) said nationally instructions to let properties had increased at their fastest pace since its survey began, during the three months to July. Overall 43 per cent more chartered surveyors reported seeing a rise in the number of new landlord instructions than those who saw a fall, up from 30 per cent the previous quarter.