Flat broke at the Waterfront

IPSWICH'S burgeoning new-build apartment bubble is at risk of bursting, potentially leaving scores of investors thousands of pounds out of pocket, it emerged today.

IPSWICH'S burgeoning new-build apartment bubble is at risk of bursting, potentially leaving scores of investors thousands of pounds out of pocket, it emerged today.

New figures show several luxury Waterfront flats have been repossessed due to mortgage defaults with each of them going under the hammer for a fraction of their original market price.

Startlingly, one Ipswich flat - apartment 502 in Anchor Street on Persimmon's Orwell Quay development - saw the biggest fall in value of any of the 1,200 flats repossessed in the UK over the past three years.

The luxury two-bedroom property, which overlooks the docks, was initially bought for £268,000 in June 2006 but went under the hammer for just £133,000 some three months ago.

Statistics show a total of nine flats on the Orwell Quay development have been repossessed with losses ranging from 33pc to 50pc of original market value.

Commentators nationally fear the bottom is falling out of the new build market, many of which are bought by buy-to-let investors, due to properties being overpriced.

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This leaves first time buyers struggling to afford mortgages while landlords are unable to attract tenants on the level of rent necessary to cover their costs.

The drop in prices on the auction market has been labelled a “market correction”.

David Sandeman, whose company Essential Information Group compiled the repossession data, said the findings reflect a potential issue with new build properties in the town being overpriced.

He said a number of people have not been able to recoup enough in rent to keep paying the mortgage.

He said: “Investors are not doing fundamental due diligence by failing to phone estate agents to check the price of flats in the area when they first buy.

“They have got to do their research and homework.

“The buy-to-let market and new build market is alive and well as long as people are sensible about the price.”

Kevin Gobbold, of Frasers Estate Agents in Ipswich, said flats on Ipswich Waterfront are now worth far less than was paid for them.

He said: “The first thing I do when I am asked to value a flat on the Waterfront now is ask how much was paid for it and warn them that it will not be worth that much now.

“Two bed flats on the Waterfront with a balcony parking and marina view are not really worth any more than £135,000 to £145,000 maximum.

“People are coming unstuck and losing lots of money.”

Paul Winter, chief executive at Ipswich Building Society, said: “Property is a long term investment and people should look at it that way but like a new car, the second hand market is not as lucrative as brand new housing at the moment.

“The case of the Anchor Street apartment is unusual but in many cases there can be up to a 25 pc drop.”

Wharfside Regeneration Ltd, the developers behind Cranfield Mill, currently being constructed on the Waterfront, were unavailable for comment as were Persimmon Homes, developers of Orwell Quay.

A spokeswoman for City Living Developments, the developers behind the 350-apartment Regatta Quay, declined to comment on the matter but revealed around half of the first phase of 80 apartments have already been sold.

n. Have you experienced a property disaster on Ipswich's Waterfront? Write to Your Letters, Evening Star, 30 Lower Brook Street, Ipswich, IP4 1AN or e-mail eveningstarletters@eveningstar.co.uk

The transformation of Ipswich Waterfront from run-down docks to billion-pound property hot spot began in earnest in 1999 when developers Bellway began construction of luxury apartments.

Others soon followed suit and Ipswich residents have witnessed the progress as the skyline has steadily changed with old silos and warehouses coming down to be replaced by prestige homes.

Orwell Quay is no stranger to headlines.

Back in 2006 The Evening Star revealed fears bogus investors may have carried out a massive fraud involving fake mortgages on scores of new-build flats in Neptune Quay and Orwell Quay.

The issue was brought to the notice of Suffolk police after letting agents discovered payments had not been made on tenant's flats.

It is understood the scam could have involved the purchase of new-build properties at bulk discount prices and subsequent sales to nonexistent buyers at inflated cost.

Police called time on the investigation because mortgage companies lending money on the flats do not want the issue probed.

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