Ross Clark says speculators and fraudsters saw easy money in buying city-centre flats with borrowed money — but investors and lenders now face huge losses as prices crash.

Ross Clark, Spectator.co.uk – 15 Oct 2008

I have developed a rather ghoulish pastime. It involves thumbing through auction results for repossessed apartments in city centres, then checking what those same properties sold for when new, a year or two ago. My record so far is a two-bedroom flat in a development called Beauchamp Place, Coventry, which was auctioned in September for £85,000 — less than 40 per cent of the £214,000 for which it was sold new in June 2006.

That flat has, however, performed better as an investment than the shares of the company that led the buy-to-let boom. The share price of Bradford & Bingley, the former building society whose subsidiary Mortgage Express lent more money to property investors than any other in 2007, collapsed from 450 pence to 20 pence before being suspended when the government moved in to nationalise it. There will be no more multi-million-pound loans for budding tycoons whose business model was based on the fateful premise that house prices only ever go up. Full Article