Wednesday, 13 March 2013

Scottish House Prices up £1,028 in January after Six Months of Falls

According to the LSL/Acadametrics House Price Index, Scottish house prices finally rose in January by 0.7% after six months of decline.
Despite the increase, however, the average house price in Scotland - £141,866 in January - is still £4,014 than a year ago. Sales also fell in January by more than twice the usual seasonal rate.

Richard Sexton, director of e.surv chartered surveyors, part of LSL, comments:

“Six consecutive months of falling house prices in the second half of 2012 threatened to drag the Scottish housing market back into the depths it fell to after the 2008 financial crisis. Prices have fallen over £4,000 in the last year – and by much more if you take inflation into account. Thankfully, a £1,000 rise in prices during January has put the brakes on the slide, at least for now.

The crux of the problem is weak mortgage lending. Demand for mortgages is falling, and the supply of them remains painfully tight. Personal finances have been eroded by inflation and savings are crumbling away like weathered rock. Second steppers in particular are content to sit tight and wait until the market begins to recover. And Scotland is more exposed to public sector cuts than England and Wales, which is stymieing demand in comparison to south of the border. 

On top of that, criteria on mortgages are strict, which is slamming the door on lots of would-be buyers. Although the Funding for Lending Scheme has helped reduce rates and encouraged banks to introduce a wider range of mortgages, borrowers still have to cross a high threshold in order to access them. This is proving difficult while their personal finances are being so savagely attacked.

There are bright spots amid the gloom. First time buyers – historically the fulcrum of a healthy housing market – are finding it easier to get mortgages thanks to a wider choice of products: first-time buyer numbers reached their biggest annual figure in four years over the last 12 months. If that improvement can be sustained throughout 2013 the housing market should begin to gradually recover. And despite the economic travails, underlying demand remains relatively strong, which should help support house prices in the long term.”