Shortage of city centre flats drives up rents
Wednesday, 26 October 2011 1:53 PM
The over-supply of city centre flats in northern cities like Manchester and Leeds has gone sharply into reverse and there is now a shortage, says property investment specialist Assetz.
There was a huge expansion in the development of new apartments in northern cities between 2000 and 2008 when the housing market was booming and finance was readily available. That led to excess supply when the credit crunch hit.
Assetz says a substantial growth in tenant demand and a lack of new supply means there is now a shortage – but the belief that there is still excess supply is holding back new development.
The firm says the rental market is exceptionally strong in the major cities because restricted mortgage lending has left a generation of potential first-time buyers with little prospect of buying a home.
Stuart Law, chief executive of Assetz, said: "As the myth of oversupplied city centres perpetuates, the shortage of apartments in cities such as Manchester and Leeds is resulting in significant competition between tenants and driving up rental values.
"Banks refuse to fund much needed development, which is worsening the undersupply situation, and with no measurable new build properties completing in the foreseeable future, tenants are going to find themselves increasingly squeezed out of core areas."
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