Buyers return but Scottish housing market still tight

The monthly housing market survey from the Royal Institution of Chartered Surveyors (Rics) found a rise in Scottish buyer interest for the fifth month in a row in March, albeit at a slower rate than the previous month.

It said 7 per cent more surveyors in Scotland reported a rise in buyer enquiries than reported a drop, compred with 27 per cent in February.

And 28 per cent more surveyors expect sales to rise than expect them to fall, up from 7 per cent in February.

But the number of new properties coming on to the market has plunged.

Rics found that 47 per cent more Scottish surveyors reported a drop in new instructions than an increase, compared with a positive figure of 16 per cent the previous month.
Laura Butcher, of Rics Scotland, said: "Lower house prices and an increase in mortgage approvals are encouraging buyers back to the market, although at nowhere near the levels we saw a couple of years ago."

The Rics figures were the latest indication that the housing market slump could be past its worst point. Recent Bank of England data showed a 19 per cent hike in mortgage approvals in February.

And the Council of Mortgage Lenders (CML) yesterday revealed that the number of loans to home buyers across the UK rose by 4 per cent in February.

The CML said there were 24,300 house purchase loans worth £3.1 billion in February, up from 23,400 the previous month, but down 47 per cent from February last year.

Loans to first-time buyers were up 7 per cent to 9,400, but still 46 per cent short of the number given in the same month in 2008.

However, Louise Cuming, head of mortgages at moneysupermarket.com, said the supply of lending remained the biggest obstacle to a market recovery.

She said: "Although no-one wants a return to the borrowing boom of 2007, and the market needed the shift towards risk-based lending that we have seen, the pendulum has swung too far now, and the overly tight lending criteria is proving to be a straitjacket for the market."

Cuming's caution was echoed by David Alexander, head of estate and letting agency DJ Alexander, who dismissed claims that the market had reached its nadir as wishful thinking. "If the housing market has bottomed out then I'll start putting salt and pepper on my hat," he said. "I have never seen confidence at such a low ebb and, with the negative effects of company and personal bankruptcies only now beginning to feed through to consumer spending, it may get lower still."

THE SCOTSMAN, 15 April 2009