The Irish real estate market continues to take a beating and England’s market is seeing its own share of fallout due to the Eurozone debt crisis, but Scotland seems to be making a turnaround while its neighbors flounder. LSL Property Services reports that sales are were 21% in July for the year and that month-on-month increases are just as impressive in many areas of the country. Sales have dropped in some places like the Orkney and Shetland Islands, but overall Scottish residential real estate has recovered to sit just 0.5% below the average overall fall in prices. Experts say easier access to mortgages for first-time buyers has played a significant role in the improvement. For more on this continue reading the following article from Property Wire.
Scottish house sales increased an impressive 21% in July as life becomes easier for first time buyers, according to the new LSL Property Services/Acadametrics index published today (Wednesday 19 September). The average house price is now £145,622 and it also shows that first time buyer sales have increased by 9% so far this year, bucking the trend in the rest of the UK.
Top locations include Midlothian where prices have increased by £17,000 in the last 12 months and Edinburgh where prices are up £14,000 since July 2011. It means that the average overall fall in prices in Scotland is down to just 0.5%. On a monthly basis Clackmannanshire has seen the biggest price increase, up 19.3%, followed by a rise of 13.4% in the Shetland Islands, 11% in Midlothian and 10.4% in Inverclyde.
At the opposite end prices in the Orkney islands have fallen 13.3% month on month, in West Dunbartonshire they are down 11.8%, in the Scottish Borders prices are down 9.8% and down 8% in East Dunbartonshire.
‘Life for first time buyers in Scotland has improved markedly this year. There have been 1,100 more loans to new buyers so far this year than in the equivalent period last year. This has helped push up activity throughout the whole market, with July seeing 1,529 more sales than June,’ said Richard Sexton, director of e.surv chartered surveyors, part of LSL.
‘While it isn’t all sunshine and roses just yet, first timers in Scotland can at least take solace from the fact life is comparably better for them than their English and Welsh counterparts. It’s been easier for Scottish buyers to access mortgages this year, and, given we’re in the middle of a double dip recession, it augurs well for the future. New buyers in England and Wales have to stump up £22,000 more on average than Scottish buyers to get a loan, which is a major reason why the Scottish first timer market is moving more freely,’ he explained.
He pointed out that although first timer numbers are still only at 46% of what they were before the 2008 financial crisis, increased activity from new buyers has helped keep house prices broadly flat. ‘Some may believe that prices have fallen about as low as they can and that the only way they can head now is up. The improvements in sales we’ve seen this year are admittedly only tentative steps on a long road to recovery. But if sales can continue on their upward trajectory over the coming months, prices will rise as demand begins to outstrip supply. The MI New Home initiative is also a welcome boon to the new build sector, allowing some borrowers to access to up to 95% LTV loans,’ said Sexton.
Prices are more erratic on a regional basis. Areas like Midlothian, which have wealthier buyers, have seen prices rise considerably over the past 12 months. ‘Buyers in these areas have more equity, so find it easier to access mortgage finance. The opposite is true for less affluent areas with high unemployment. Activity has fallen in these regions, which has pulled down prices,’ he added.
As far as the outlook is concerned, although the government has announced a number of house building initiatives to help kick start the economy, these activities will not have much influence on the housing market over the next five months, according to Peter Williams, housing market specialist and Chairman of Acadametrics.
‘The main factors which are currently affecting the market are the difficulties in obtaining mortgage finance, with the lenders looking for high deposit levels and sound credit ratings, along with the uncertainties of the current economic climate, which do not help build consumer confidence,’ he explained.
‘These factors account for the current historically low level of housing transactions which, despite the 9% pick-up over the last year, are still some 54% down in the first seven months of 2012, compared with the first seven months of 2007. Given that we do not anticipate significant change in the banks and building societies lending requirements, we can only conclude that the housing market will continue to operate at half speed, with little change in house price behaviour from the first half of the year,’ he added.
This article was republished with permission from Property Wire.