The latest index from LSL Property Services indicates that Scotland may finally be on the road to a real estate recovery. The Scottish housing market has been taken a beating since the beginning of the global financial crisis in 2007 and the recent Jubilee bank holidays did nothing to help matters, but LSL reports that house sales were nevertheless up 9% in the first half of 2012 when compared to the same period last year. Statistics show price performance is also recovering although overall prices remain 0.1% below a year ago. Experts attribute the positive trend to more people having access to bank loans, but caution in the market is still the watchword. For more on this continue reading the following article from Property Wire.
Scottish residential property sales are 9% higher than 2011 and the residential market is taking its first steps towards recovery, according to the latest house price report.
There were 2,674 more house sales in the first half of 2012 compared to the same period last year, the index from LSL Property Services and Academetrics Shows.
There are also signs that prices are recovering. Prices in Midlothian have increased by £20,000 in last year and prices in Edinburgh were up almost £13,000 over last 12 months.
Overall prices are 0.1% below a year ago and were unchanged month on month, taking the average price to £146,093.
‘The Scottish housing market is climbing the ladder to recovery rung by rung. Despite the impact of the Jubilee bank holidays, house sales so far this year are 9% higher than in the equivalent period last year,’ said Richard Sexton, director of e.surv chartered surveyors, part of LSL.
‘The fact activity has increased during a year when the economy has been weak bodes well for the future, and is testament to the underlying strength of the housing market and pent up demand,’ he added.
Although bank lending is still in the doldrums more buyers have been able to access mortgages than in 2011 and built the big deposits banks require to access affordable loans, which has eased the gridlock in the market and jump started activity.
‘An air of cautious optimism surrounds the Scottish housing market at the moment. Slowly but surely the building blocks of recovery are being put in place,’ added Sexton.
But he pointed out that there is still a long way to before the market drags itself out the hole dug for it by the financial crisis. ‘Sales are still at half they level they were before 2008. Recoveries from recessions caused by debt are always fragile, and a severe downturn in the eurozone or a sharp squeeze on the credit available to banks could still shatter much of the progress the market has made. Despite the deposits being saved, the lack of loans to first time buyers is a huge roadblock to a complete recovery,’ he said.
The index shows that prices are erratic on a regional basis, up 19.9% in the Shetland Islands, but down 9.2% in the Scottish Borders. Also areas like Edinburgh and other parts of Midlothian, which have pockets of wealthier buyers, have seen prices rise considerably over the past year.
‘These areas are full of buyers with more equity, so more people are finding it easier to get a mortgage. This is pushing demand above supply and causing prices to rise. On the flip side, less affluent areas with high unemployment have seen activity drop away, which has dragged down prices,’ added Sexton.
In Scotland as a whole, the prices of flats and semi detached properties have each risen by 0.1%, while the prices of terraced and detached properties have fallen by 1.1% and 1.8% respectively.
In terms of transactions, over the year the sale of flats, semis and terraces have increased by 5.9%, 1.4% and 0.2% respectively, while the number of detached properties sold has decreased by 1.7%.
This article was republished with permission from Property Wire.