Mike Rudd partner at Acies comments on…

?The state of the Liverpool property and construction markets and how the credit crunch and interest rates have affected the economy??
Mike Rudd ? Partner Acies

?There is a huge amount of uncertainty over the current state of the market at the moment and it is clear that the credit crunch has already affected a broad spectrum of people throughout the property and construction industry, from private buyers and developers up to institutional investors.

The business, construction and property press has been dominated by the emotive headlines surrounding the credit crunch for nearly a year, since we first saw the effects on Northern Rock.

For many years Liverpool?s property market has stayed largely buoyant with interest maintained for both residential and commercial developments although a recent slow-down in growth in the residential market is becoming more apparent.

As the impact of the credit crunch becomes visible throughout Liverpool it is felt that the city will not be hit as hard as others as the optimism created by the active regeneration of the city continues to have a positive effect.

It?s clear that we are having a crisis of confidence in the banking sector which has brutally cut the supply stream of money, and is affecting everyone involved. Primarily, Liverpool?s residential market has been affected by mounting interest rates as banks are becoming increasingly reticent to lend money. The frustration throughout the industry is that, as banks become stricter on giving loans, the slow-down in growth in Liverpool?s residential market will spread into the commercial sector.

There is still activity within Liverpool?s commercial property market, but many are still nervous over concerns that banks will no longer allocate funding to developers even though they are creating sustainable, economically viable schemes.

Despite the concerns over the current state of both Liverpool?s and the UK property market in general, some benefits can be drawn from what we are experiencing.

So long as funding does not entirely dry up, the stricter accountability and due diligence introduced by the banks will help to sort the weak from the strong in terms of developments and developers with the resultant increase in the overall quality of schemes. ?