Scotland's housing market in the doldrums until 2015

31/12/2011

The Scottish housing market will remain flat during 2012 and may not return to growth for at least three more years, property experts have warned.

Sales levels fell further in 2011, and while prices in most areas remained relatively resilient, few Scottish housing market insiders believe the outlook for the year ahead is any brighter.
The number of homes selling in Scotland is down 60 per cent from the level prior to the credit crunch, according to Rettie & Co, which said sales levels are likely to remain low for another three or four years.

Prices falls have been more modest, although the average house price in many areas of Scotland is at its lowest for several years. While Edinburgh house prices are still about a third higher than the Scottish average, those in Glasgow are some 15 per cent lower, according to John Boyle, Rettie’s head of research.

David Marshall, business development manager at Edinburgh Solicitors’ Property Centre (ESPC), agreed that signs of an upturn in the property market are elusive.

“The number of homes selling may pick up slightly, but prices are likely to remain broadly unchanged or inch down slightly,” he said. “The factors constraining demand just now – large deposit requirements, high unemployment, low earnings growth and poor consumer confidence – aren’t likely to improve significantly in the coming 12 months.”

With the rental market booming, David Alexander, owner of letting agency DJ Alexander, is more upbeat. He believes that 2012 could be a repeat of the past 12 months.

“Almost certainly, prices will not increase and in some clusters of the market may even fall further.

“This will continue for as long as first-time buyers are prevented from gaining a foothold on the housing ladder.” But first-time buyers in Scotland could soon be boosted by the launch of a new mortgage indemnity scheme.

The MI New Home initiative, being developed by Homes for Scotland, aims to use government security to encourage lenders to make more 95 per cent loan-to-value deals available,

Jonathan Fair, chief executive of the trade body, said: “Provided the Scottish Government matches the transaction support term already announced by the Chancellor for England, we expect that this will generate increases in the output of new homes of more than 15 per cent in the first year alone.”