Work continues on Blackburn flats despite credit crunch

4:02pm Tuesday 15th April 2008

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By Tom Moseley »

A BUSINESSWOMAN is determined to press on with a multimillion pound housing complex, despite UK-wide warnings over the property market.

Experts say too many flats have been built nationwide and prices are coming down because of a lack of demand.

And the global credit crunch - which was sparked by US banks lending too much money to customers - is also making it harder for would-be buyers to get mortgages, because lending restrictions have been tightened.

Increased interest rates mean investors who buy flats to rent out are finding the rental income doesn't cover their mortgages, and they are then struggling to sell the homes.

But Margo Grimshaw said that while gloomy forecasts of a credit crisis did concern her, she would "cross her fingers and smile" as work on her £15 million Blackburn town-centre project continued.

She said: "It is concerning, there's no doubt about it. We couldn't have predicted it at the time.

"But at the moment we seem to be getting a healthy level of interest.

"Our prices aren't pitched too high, and the fortunate thing about us is we are the first, so Blackburn's housing market isn't overstretched.

"Cities like Leeds and Manchester have built too many already."

The 79 apartments will cost between £100,000 and £200,000, with five luxury penthouses costing £285,000 each.

Builders are also creating a car park for 80 vehicles on the Market Street Lane site.

Also in the pipeline is the neighbouring £70 million Cathedral Quarter development, which will create another 135 flats. Work on that scheme is set to begin on site in 2009.

Ms Grimshaw said she had been contacted by buy-to-let investors, but said interest had also been strong from private buyers.

But members of the council's planning committee recently said developers were "obsessed" with building flats, despite a lack of demand.

Peter Bolton King, the chief executive of the National Association of Estate Agents, said: "Hindsight is a wonderful thing, but over the last 12 years or so planners have been very willing to approve significant developments of flats.

"In a number of areas this has led to over-supply and the person who owns the flat can't rent it so they put it on the market."

And Blackburn estate agent James Whitehead said anyone expecting to sell upmarket flats in the borough was "living in cloud cuckoo land".

He added: "I just don't think there is the market for new flats in Blackburn, and I don't know how they will be filled."