Tale of two towns on house prices

By Kevin Peachey
Personal finance reporter, BBC News

Derwyn Roberts has been trying to sell his home for 18 months

Derwyn Roberts may be repairing harps in the workshop beside his four-bedroom house for some time yet.

The 79-year-old retired carpenter, with a hobby of restoring the classical instrument, wants to sell his home, but he has only had one viewing in the last 18 months.

He lives in Wrexham where, according to Land Registry figures, house prices have dropped more than anywhere else in England and Wales in the last 12 months.

Mr Roberts has dropped his asking price from £275,000 to £249,000 and the viewing prompted an offer, only for it to be withdrawn two weeks later.

He remains philosophical.

"I am disappointed, but I do not have to get out. I've become quite attached to the place," he says.

All gone flat

Mr Roberts' intentions would cheer the developers who some blame for oversupplying the market in the self-styled capital of North Wales.

New apartment blocks have sprung up around Wrexham

He wants to move into a newly-built apartment down the road. More manageable, he says.

While they are clearly not the only reason for Wrexham's 7.2% fall in property prices last month, when compared with the same month last year, the new blocks on the outskirts of the town centre are proving increasingly difficult to sell.

"We've gone from not having many apartments to having a glut of them," says local estate agent manager Edward Mason.

"Flats are doing the worst out of any section of the market."

Building firms flocked to booming Wrexham in recent years. With good transport links and below average unemployment, the market town has transformed itself from its former reliance on the coal and steel industries.

Wrexham, according to council leader Aled Roberts, became an "economic powerhouse".

But land prices were high and developers wanted to maximise the number of properties on one plot.

"We got to a situation where we were concerned about the number of applications for apartments," says Mr Roberts.

David Evans, of lettings agent Bowen Son and Watson, says that he is seeing more people letting one property they cannot sell after moving in with a partner. This suggests there are not lots of buy-to-let investors offering these new apartments for rent.

The number of sales of all types of properties in Wrexham fell from 158 in February 2007 to 89 in the same month in 2008, the latest Land Registry figures show.

Mr Mason, of Thomas C Adams estate agents, points out a two-bedroom flat with a balcony which he says would have collected £180,000 two years ago and is now on the market for £163,950 - still much higher than Wrexham's average property price of £139,662.

One developer has just offered a deal of two-bedroom flats for £100,000.

Boom time

Many people seem to accept that prices over the last four or five years were over-inflated.

We got to a situation where we were concerned about the number of applications for apartments Wrexham council leader Aled Roberts

The "correction" in the market is welcomed by a lot of people who were not buying during that period.

But just as is the case across the UK, those who would normally benefit most from falling prices - first-time buyers - cannot get their hands on a mortgage.

As a member of staff holds up four asking price reductions that arrived that morning, Mr Mason says whole chains are stalling as they wait for those at the end to find a mortgage deal.

But he stresses that people still want to move, there are bargains to be had, it is not all doom and gloom, and it is definitely not the 90s.

A new shopping centre opening soon backs up that viewpoint. There is not row on row of closing shops that were seen during the recession which marked the last housing market crash.

Saving the land

The concern for the council leader is that, in the current climate, developers stop building and instead sit on their land-banks.

Edward Mason says confidence is needed in the housing market

This would mean the number of new affordable homes built as a condition of planning permission would also fall. That would be another kick in the teeth for first-time buyers.

Mr Roberts wants to lower the threshold that requires developers to include a certain proportion of affordable homes in any new build.

The impression is that Wrexham is a town which tells the story of many areas of England and Wales.

Economic prosperity and low unemployment prompted surging house prices and a glut of new apartments in the last five years. But now first-time buyers cannot get the finance to catch the falling star buys and not enough affordable homes are being built.

Local developer Steve Griffin says the answer is knowing the area and building to match demand. He says he has been "a little bit more prudent" and has sold five out of nine new large family homes at the rate of one a month.

The other story

In Middlesbrough, it sounds like a similar story.

Many people are glad prices are falling after the recent boom

Regeneration in the area has prompted a surge in house building projects in the last few years, including lots of new flats in an area which previously did not have many.

But here, house prices have risen the most outside of London, growing by 9.1% in the last year.

Kevin Parkes, head of planning at Middlesbrough Council, says new building has brought a self-fulfilling confidence in the housing market, and plenty of buy-to-let investors.

The low price of the average home - £20,000 lower than in Wrexham, at £119,779 - means a relatively small increase in value caused a noticeable percentage rise.

Mr Parkes says the uplift in prices seen across the country was delayed in Middlesbrough after the last crash.

He hopes that the town will be able to ride out the latest correction but he is aware that, although not evident yet, national housebuilders working in the town who rely on international lending will be affected by the credit crunch.

"No region can be insulated from the property market. But in the last crash certain towns rode the storm much better than others," he says.

There is some concern, he adds, that if the buy-to-let investors decided to sell up, some areas of the town could see confidence knocked by a string of properties being put on the market.