Azara Blog: Flats dropping in price in the UK

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Date published: 2005/04/16

The Financial Times says (subscription service):

The price of new flats has fallen by 10 per cent in a year, according to a survey that adds to fears of housebuilders flooding the market with overpriced apartments.

While the value of new detached and semi-detached homes leapt between March 2004 and March 2005 (17.8 per cent and 8.8 per cent respectively), prices of new flats fell by 9.8 per cent, according to the survey by
The survey reinforces Land Registry figures for the year to the end of 2004 which showed the price of new flats had fallen 1.2 per cent while the price of the average residential property had soared by 11.8 per cent.
Flats have gone from less than 20 per cent of new homes built each year to more than 50 per cent, largely as a result of government policies that favour high-density, brown-field sites. The buyers have mainly been investors, often with heavy debt, looking for capital growth.

When one, not particularly desirable, sector goes from less than 20 per cent to more than 50 per cent of the market then you know you have a problem. Although the speculators, including the developers, are not blame free, the government and the urban planning elite have to shoulder much of the blame. They have this idea that "executive" homes (the dreadful name given to new suburban homes which are big enough for a family) are awful and that everybody should be forced to live in an urban shoebox. Flats are ok for young people but not for most people. As it happens Cambridge too has seen an explosion of flats coming on the market (and another huge development is being built on Hills Road next to the railway line). Fortunately Cambridge has a large student population, so there might be some demand for all these new flats, especially if the prices do indeed fall to a more sane level.

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