Savvy investors move in as they sense prices are at rock bottom
North Leeds may be the most desirable place to live in the city but the hotspots are in the south. Sharon Dale reports.
IF you aspire to live in Leeds’s best locations then you look north towards old favourites like Alwoodley, Adel and Bramhope, home to the highest percentage of millionaires.
Yet the smart money is looking in entirely the opposite direction, according to estate agent Mark Manning of Manning Stainton, who reveals that investors are busy snapping up homes in south Leeds suburbs like Beeston, Hunslet and Holbeck.
“There are a large number of investors buying terraced property between £60,000 and £85,000. They are also looking to turn larger properties into bedsits,” says Mark. “They are looking at rental yields of eight per cent for a terraced property and up to 20 per cent for a HMO (house in multiple occupation), which are excellent returns compared to savings accounts or stocks and shares.”
Most of the investors are savvy cash buyers who sense that prices have reached rock bottom and could rise in the near future.
“When the property market last hit the skids, the first areas that came out of the slump were places like Beeston and that seems to be the case again. Investors are the most clued up so the fact they are buying is a very good indication that there is light at the end of the tunnel,” says Mark.
First-time buyers will find the price is right in south Leeds, though some consider the area too “edgy”. Instead, many are hunting in up and coming spots like Headingley and Meanwood, where students are vacating properties to be closer to universities.
Trendy Chapel Allerton’s popularity is waning slightly as young buyers head to nearby Roundhay.
“Roundhay has always been popular but it’s even more so now, especially with young buyers who are thinking ahead to children and are looking for good primary schools,” says Mark who adds that first-time buyers aren’t as keen on renovation projects. The pressure to get a deposit together leaves no spare money for renovating a property. They look for something wellpresented at the right price.
Prices in Leeds have fallen between five and 25 per cent since 2007, depending on area but although the market is subdued Manning Stainton report a 25 per cent rise in sales in November compared to the previous year.
A percentage of buyers were relocators attracted by jobs and amenities, which will soon include a new £60m arena.
“People want to live in Leeds. It’s changed a lot over the last 15 years. It’s a big commercial centre and it’s very cosmopolitan,” says Mark.
Nowhere has changed more than the centre of Leeds, where city living has proved a big success.
Jonathan Morgan, managing director of sales and lettings company Morgans City Living, says that while sales here have declined, rentals are booming and there is now a supply and demand problem.
“We fully expect this trend to continue throughout 2012 and probably beyond. Mortgages are harder to come by at an equitable rate and, as a consequence of this, many would-be first-time buyers are choosing to rent instead.”
Those who bought off plan in the recent boom have had mixed fortunes.
“Those who invested sensibly with generous deposits and a long-term view have been able to sit back and enjoy growing rents and great buying opportunities, whilst those who relied on instant equity in a growing market and didn’t put in a significant deposit, have been fighting a losing battle. As the cost of borrowing for highly geared mortgages has risen faster than rents have, many of these buyers have ended up facing repossession. In keeping with the adage that one man’s loss is another man’s gain, this has allowed established landlords to expand their portfolios at a significant discount,” says Jonathan.
“Our most prolific client acquired six distressed city centre properties in 2011, all from distant asset managers and in the process, created genuine equity of £250,000. His best purchase in our view was a property he bought at auction in London for £100,000 which would sell on the open market for around £140,000.”
The city centre is starved of new rentals. The 20,000 new apartments set to be constructed by about 2020 have been derailed by the recession and new builds are likely to be limited to about 1,000. Rents in the city centre, which range from £550 for a one-bedroom flat and £750 for a two-bedroom, are now increasing slightly thanks to the demand.