23 July 2014
The recession may have halted apartment block construction, but more people now turn to the heart of Leeds as they switch from buying to renting.
Rod McPhee found out how demand for city living is now outstripping supply.
Two years ago
The housing market slumped, and one of the worst sectors hit in Leeds was city living. By 2008 the banks of the River Aire were lined by apartment blocks with hundreds of units up for sale and very few people able to buy.
Fast forward two years and city living is booming. Rental agencies are reporting a huge surge in demand as owners of apartments have quickly switched from trying to sell properties to letting them.
Mike Moon handles city centre lettings at Linley and Simpson in the middle of Leeds. He said: "Two years ago things were in a lull. Because we're the second biggest financial city outside of London there were a lot of job losses, so we found a lot of people had to move out of the city centre or move back with parents.
"But in the last year or so things have really picked up, that lull seems to have passed a little but young couples and younger people who would struggle to get a mortgage at the moment, their only option is to rent really.
"We've had a great 12 months. It's tricky to say exactly because the market is so seasonal but, on average, we'd normally be looking at renting about 30 to 40 properties a month. But in September we let 60 it was our most successful month since we opened in the city centre five years ago."
But the recession has proved a double edge sword for the city living market. Although it has forced many people to rent, and provided developers with some kind of income, It also stopped the construction of new developments in Leeds.
Lumiere on Wellington Street, Spiracle by the ring road, the Kissing Towers on Sovereign Street and Green Bank off Whitehall Road were due to bring hundreds of new apartments onto the market over the next five to 10 years. Now they've all been scrapped and letting agencies can't get enough properties.
Mike said: "After the massive influx of constructions, very few projects have completed recently, but at the same time more and more people want to rent. We're at the stage now where demand is outstripping supply.
"And at one time a lot of people came into the city centre initially so they could just be close to work or the social scene then move on. But now we have less and less people moving on after a year or two, and more staying on long term. That's another factor which is reducing the supply."
Evidence of this dearth can be found when the Waterside development, sandwiched between the canal, River Aire, the ring road and City Island, was finally put up to let this summer.
Mayfair Developments finished construction of the 183-apartment scheme in 2008 with the intention of selling them. Instead it sat empty for almost two years and was held up by some as an example of how the city living bubble had burst.
But when they were made available it took just three months for them all to be snapped up at a rough cost of between £550 and £900 a month.
Judith Oliver, owner of LS1 property letters said: "Waterside was only standing empty for some period because it was just one of many casualties of what happened at the time. It was nothing to do with people not wanting to live in them, they just couldn't get the finance to buy them.
"It just took some time to make the change from selling them to renting them, but since that's happened the development has filled up very quickly. We manage about 75 per cent of the complex and every single apartment has gone.
"In fact we've always found the rentals market a very strong market, we've grown year on year. But in 2010, in our best month, we were something like 20 per cent up compared to the same period last year.
"Yet, still, there's this perception that there are hundreds of apartments sitting empty around Leeds just looking for people to let them. Well, if that's the case, we'd like to know where they are!"
That's a sentiment echoed by Guy Ackernley partner at Leeds property consultants King Sturge.
"City living can never really win." he said. "The cynics will always throw one or other criticism at it. First they point towards the saturation of the market, then when the market stops growing and rents rise - as we think they now will because of the current situation - they'll point towards apartments as being expensive and out of the reach of ordinary people.
"But city living is here to stay. The rentals market has always been stronger and this year there's no doubt it got stronger.
"People are less transient, they're staying in their flats much longer and the time that flats are left vacant between one person moving out and another moving in can be a day or so. When an apartment becomes vacant we are invariably seeing them snapped up in days.
"As well as seeing rents potentially rise in 2011 we think more people will be in a position to buy. There's already a fairly robust market for buyers. The scheme we represent at Granary Wharf has already shown people can still buy.
"In 2010, just as we came out of a recession, we sold, on average, six apartments a month at Granary Wharf.
"And that's because they are of an improved quality. Before the recession there was an evolution in the quality of city living apartments, but sadly that evolution has stopped because for the next three years at least there will be no new projects coming on line and we wish they were.
"Of course people will point towards that as an example of city living's failure. It isn't. It's purely down to the inability of people to get finance to build these projects.
"Either way, city living does work because the demand is still there. Just look at Leeds now, there are thousands of apartments here and they are all full."