Sunday, January 08, 2006

New-build flats have fallen in value by 5.6% in the past three months

Guardian Unlimited Money Property For sale - at a price that's far too high: Lenders issue warning about valuations on new-build homes

Phillip Inman, Rupert Jones and Lucy Barnard
Saturday December 17, 2005 The Guardian


Are you being ripped off by a dubious valuation on a new-build apartment? Mortgage lenders said this week that they are becoming increasingly concerned at valuations on new-build flats which are inflated to the point where a Manchester home can have a Monaco price tag.

The Council of Mortgage Lenders (CML), which represents the bulk of banks and building societies, says the public is being duped by surveyors who rubber-stamp developers' advertised prices for apartments at far higher levels than the market can sustain.

New-build flats have mushroomed in the capital and city centres across the country, and now account for 50% of all homes being built in Britain. Many are sold 'off-plan' before they are built, with developers accustomed to getting the deposit cash in early. Punters make a commitment with only computer-generated images and plans submitted to local authorities as a guide."

Check out the complete article - click on the title.

How many thousands of, admittedly naive, investors are now looking at massive losses due to the 'off-plan' apartment scam. If an offer looks to good to be true (15% instant equity!) then it usually is. Buying off-plan made money during the boom but it started to be massively promoted by unscrupulous developers and investment clubs as the market turned cold. Easy money can sometimes be made in property investment - when you find it yourself. When people are 'giving' you easy money watch out.

Chris Bell

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