Real estate experts say all the distraction caused by the Olympic Games has finally caught up to Scottish real estate stats, noting a significant drop in residential property prices in September. Housing transactions were down 17% for the month and prices slipped by 0.3% as prospective buyers stopped competing for homes across the country. The good news is that the economy appears to be growing, inflation is easing and the Scottish government’s lending program is helping to fuel the mortgage market. A few regions like Inverclyde and the Orkney Islands even managed to perform, thanks in part to the positive trends. For more on this continue reading the following article from Property Wire.
Prices of residential property in Scotland fell 0.3% in September as the market became a victim of a post Olympic slowdown, the latest LSL/Acadametrics index shows.
The data also shows that housing transactions fell by 17% in September compared to the previous month and year on year prices are down 2.9% with the average house now costing £143,406.
‘House prices lost some of their altitude in September, but this wasn’t a simple case of the market losing thrust. The Scottish housing market was still jetlagged following the distraction of the Olympics, with the absence of buyers hitting the streets in August feeding through into a reduced number of sales in September,’ explained Gordon Fowlis, regional managing director of Your Move, an estate agency owned by LSL.
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‘As fewer buyers competed for homes, reduced competition sent prices gliding down. Prices aren’t heading for a crash landing however, we’ve already seen sales figures rebound in England and Wales, and Scotland’s likely to show a similar improvement in the last quarter of the year as buyers make up for lost ground over the summer,’ he said.
But he added that it is clear that the housing market is still facing severe structural challenges. ‘While the affordability of house prices have improved for the average Scottish buyer, the limited availability of mortgage finance is still a significant drag on activity, and the number of new buyers entering the market is still historically low,’ said Fowlis.
‘But there are reasons for optimism. The economy is growing once again, while inflation is slowing, which should help buyers’ spending power take off. On top of this, the government’s Funding for Lending is showing signs of helping the mortgage market start climbing again. While lenders’ ability to boost the number of first time buyers to anything like pre-crunch levels is being hampered by capital adequacy requirements, any improvement in the lower tier will be felt throughout the wider housing market as chains are unlocked,’ he added.
The index also shows that there are considerable regional differences. While 22 regions have seen prices fall over the last year, 10 have bucked the trend, with Inverclyde and the Orkney Islands seeing annual rises of 5.5% and 5.4% respectively. West Dunbartonshire saw the biggest fall with prices down 16.9%.
‘The future performance of local markets in the long term will be closely tied to the performance of their immediate economies and labour markets. A key factor in whether these micro-markets see prices rise or fall in 2013 will be how hard they are hit by new public sector austerity measures in the New Year,’ said Fowlis.
‘There are also clear signals from the Scottish Government that they wish to travel their own road in respect of housing policy and we are about to see an interesting experiment as policy North of the border increasingly deviates from that in England and Wales. Time will tell which approach bears the most fruit,’ he added.
This article was republished with permission from Property Wire.