Empty-nesters and retiring couples are riding to the rescue of developers trying to sell apartments in city blocks.
Recent figures indicate a new trend where sixtysomethings are turning to an active social life in town rather than heading for the cottage by the sea or a quiet life in the country.
Grosvenor and Berkeley Homes report that the “grey pound” is snapping up a growing number of inner-city apartments in their most recently completed schemes, which have struggled to sell during the downturn. In some instances buyers are seeking a flat in town while retaining their main home.
Grosvenor, the developer of the One Park West scheme in the centre of Liverpool, said that in the first half of this year, rather than selling to the traditional target market of first-time buyers and buy-to-let investors, a growing proportion of flats had been going to cash-rich retired couples who wanted to be closer to the action.
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Berkeley Homes has said that sales at its Gunwharf Quays development in Portsmouth, where prices start at Â£165,000 for a one-bedroom flat, have been boosted by older buyers who want the convenience of living on one floor but prefer not to buy a bungalow.
A spokesman for Berkeley Homes said: “We have seen a rise in older downsizers moving from four-bedroom family homes, who like the easy maintenance as well as the convenience and extra security. There are no gardens to keep and they also like the modern decor, which does not require any work.”
The trend marks a fundamental shift in the type of buyer for modern developments as many younger people and buy-to-let landlords remain locked out of the housing market by harsh lending criteria. That has emerged amid further evidence of a stabilisation in the housing market, as Land Registry data showed that property prices jumped at the fastest rate for five years in July.
A 1.7 per cent increase in the prices paid for properties in England and Wales was the biggest monthly rise since May 2004, bringing the annual decline to 11.7 per cent, the smallest decrease since last October.
King Sturge, the estate agent selling flats at One Park West, where studios cost Â£90,000, said that the retired buyers saw the apartments as a better place to keep their money than savings accounts.
Richard Donnell, of Hometrack, the property market analyst, said: “The very nature of the market means that those that do not need a mortgage tend to make up the majority of buyers. At the same time, a growing number of retired people have decided they want to move into towns. They want to be back where the action is and where the services are, especially as people are retiring younger and have active social lives.” Retired buyers have been attracted by the fall in value of new-build flats, Mr Donnell said. Prices have begun to stabilise amid soaring demand from homebuyers and fewer finished developments. However, Hometrack said that discounts of about 30 per cent were still possible on new-build asking prices, with those buyers who had access to the most cash in the best position to negotiate.
Mr Donnell said: “It used to be the case that there were so many buy-to-let investors willing to pay over the odds that downsizers could not get a look in. But now they can, and have spotted that good deals are possible. They also think it is a better use of money than leaving it in the bank.”
The biggest losers in the Credit crunch appear to have been the specialist buy to let lenders such as Bradford & Bingley, Dunfermline BS and West Brom BS; with the availablity of high loan to value ratios virtually gone from the market for buy to let investors this clearly has created a great social opportunity to see City Centre Schemes being filled with owner occupiers as opposed to people renting who in the main tend to be more transient. As a result one of the unforseen upsides of recent upheavals seems to be that large scale urban renewal will deliver in social as well as economic terms on a much larger scale and that the owner occupiers will be a lot more likely to get involved in community building activities which can only enhance the urban environment.
From an investment point of view it means that if you have cash to invest versus taking on say an 80% plus buy to let mortgage that the change in occupancy class will give much greater exposure to capital appreciation as people aspire to buy to occupy as opposed to let in future years in a lot more city centre schemes. In terms of design quality people are generally more demanding when they will actually live there themselves so this can only be a positive development.