Price correction was long overdue

For several years this has worked very well and a lot of people have made a lot of money.

But the market changed swiftly and dramatically last year and we are now seeing the consequences. People who now want to sell on quickly are finding few buyers with finance and the rents they were promised (and stupidly believed) will not cover ever increasing monthly payments on mortgages that were often 100 per cent if not 110 per cent of the purchase price.

Suddenly the very banks that helped create this unsustainable property bubble have now unceremoniously burst it.

And while they may be bailed out by the Government who is going to bale out the investors who ploughed their savings into city centre property?

Well no-one.

So how worried should we be? Well very worried if you have to complete on an expensive apartment, need to borrow more than 80 per cent and have no funds in reserve; fairly worried if you are a developer and are suddenly having to be inventive when it comes to sales; not worried if you have bought to live and are happy with your place and decidedly optimistic if you have some savings and want to buy a place in the city this summer.

There is a suggestion that property in Manchester city centre is overvalued by about 20 per cent but that’s a huge generalization and what this slowdown has done is highlight the issue of quality.

Too many schemes have been built offering too much of the same and of too poor quality.

Beetham Tower is an iconic landmark and the majority of people who bought there were investors who had already done well via Beetham in Liverpool. But although it is a dramatic building from the outside the inside is disappointing and when buyers are spoilt for choice then quality wins out.

At the other end of the road No1 Deansgate remains desirable, with a triplex changing hands there last month for more than £1.6m and developments offering something different like The Heart at Media City with the lure of the BBC are tempting back investors.

Yes the property bubble has burst, yes some people have lots tens of thousands of pounds and more probably will, yes planners have agreed some poor schemes when they should have said no, some developers have been greedy and some estate agents will go to the wall.

But city living is not going to stop. Manchester’s 20,000 city population is tiny compared to others in Europe and with the BBC move, the on-going investment at Spinningfields and Piccadilly, a Royal Opera House and the potential of £3b in public transport improvements the potential does not stop.

The correction was probably long overdue and Manchester is far better placed to weather the storm than any other city.

Jill Burdett 29/ 4/2008