Monday, 23 February 2009

House Price Madness

From 1887 to 1990 Cliff Vale pottery (pictured) churned out ceramics for Twyfords. But having outlived its usefulness this grand Victorian building was abandoned to the rats and the junkies.

Fast forward 15 years work began on the site at the height of the housing bubble. As the pottery complex is situated right next to the Trent and Mersey canal with views over the well-tended Hanley cemetery, Lock 38 was going to be as des-res as it gets in Stoke-on-Trent. The developers certainly thought so. When their flats came on to the market in late 06/early 07 the one bedroom properties began at £99,000.

But what a difference an economic downturn can make. When the arse fell out of the market the prices were slashed to £59,000 for first time buyers, with a sweetener that the developer will pay the mortgage for a year. That's quite reasonable given the silly price they started off at. But then as I sailed past them on Saturday morning I noticed they had been dropped again, to £35k! And now, looking at the development's website, I see they're advertised to FTBs at £30,000!! Talk about spiraling negative equity for the poor buggers who bought at the height of the boom!

If I had a spare £30 grand and was an unscrupulous buy-to-let landlord type I may well be tempted. But are the prices likely to go down further? What's the state of the rental market?

According to the government's communities website, the numbers applying for statutory homeless status (defined as households facing an imminent loss of their home, or individuals and families who sleep rough) have been falling since the second quarter of 2005 to the latest data, which covers the third quarter of 2008. With repossessions rising and an economic nightmare threatening to throw hundreds of thousands more out of work, it is reasonable to expect the overall downward trend will be arrested and reversed. Thousands will experience the misery of homelessness.

And yet tens of thousands of empty properties like those of Lock 38 exist for which buyers cannot be found. If throwing people out of their homes while there is a glut of available housing isn't a damning indictment of the capitalist system, I don't know what is.


Anonymous said...

You don't understand how these schemes work. These deals are only for key workers and shared ownership. There are careful clauses in all contracts to make sure that buy-to-let and price-flipping can't happen. The flats ar ein a great location and are still worth a similar price to what they were in 2007. As an apparently "socialist", you should be happy that the hard-pressed taxpayer is subsidising affordable housing for key workers, surely?

Phil BC said...

I have no problem with affordable housing measure - just a bit puzzled why you think I have!