Find out what’s happening in the property investment arena both in the UK and internationally
Pension Crisis May Dent Property Rice Hopes
April 17, 2009Article by Ray Withers
The fragile UK property market could take another push in the wrong direction as investors relying on property to fund their pensions might look to cash in their holdings at below market value prices to avoid more losses. More than 26% of people aged 55 to 64 are relying on property to fund their retirement, and 1.7 million pensioners already rely on property to fund their old age, according to the report from price comparison company uSwitch.com.
‘Falling house prices coupled with the stock market crash and low savings rates have combined to take the wind out of the sails of many of those approaching retirement,’ said Ann Robinson, director of consumer policy at uSwitch.com.
‘Despite recent reports of a 0.9% property price increases, this is a drop in the ocean compared to the overall 15.7% decrease in prices over the last 12 months,’ she added. If these investors decide to offload their properties, it’s likely the market will see a flood of below market value UK properties that will further depress prices just as everyone was hoping the market had hit the floor and was about to stabilise.
One company that has extensively researched the market, Property Frontiers has established exclusive relationships with reputable developers and secured a number of newly built UK discounted property.
The company covers cities like, London, Manchester, Birmingham, Liverpool, Leeds, Edinburgh, Cardiff and Glasgow.
Properties in their portfolio include:
Merchants Court, Wavertree, Liverpool – an exclusive below-market-value deal with 30 two-bedroom apartments at up to 25% discounts. The apartments are fitted out ready to rent and prices start at just under £90,000. Last year, identical property in the same block was selling for £135,000. Wavertree is a popular Liverpool suburb. Merchants Court is a few minutes walk from the high street, station and top class sports facilities. The city centre is 10 minutes away by train. Gross yields here are expected to lie between 7% and 10%.
The Shrubberies Mews Townhouses, Streatham, London –another exclusive development of a small, gated community of just eight townhouses. The developer is offering a massive £75,000 discount on the certified valuation – with a sale price of just £300,000. The houses are open plan on the ground floor and have two double bedrooms and a family bathroom upstairs. Again, they are a short walk from local shops and stations. The City and West End is within easy reach by train Gross yields of 6% at £18,000 per year are expected from the development. Both these developers are selling at more or less the price of the land plus build costs to clear the properties from their books. Independent valuers have certified the property prices.