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Housing market shrinks by 60% ... but estate agents hopeful - RJA Properties: Lettings Agent Manchester
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20 May 2010

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Home information packs (Hips) will be consigned to history, the Government has announced.
17 Mar 2010

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Estate agents should be subject to the same levels of regulation as letting agents, it has been been stated.
22 Jan 2010

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Thousands of Britons with holiday and retirement homes in northern Cyprus face eviction after the Court of Appeal upheld a decision that a British couple must surrender disputed land.

Housing market shrinks by 60% ... but estate agents hopeful


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Predicting the Scottish housing market in the global economic downturn, one estate agent told The Herald last autumn, is like chasing a ball down a hill.

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Estimates of where it will stop and attempts to halt it flounder as the ball continues to accelerate downwards.

The latest official data on house prices recorded by the Registers of Scotland and made public yesterday now show just how steep that hill has been.

In short, the statistics illustrate a dramatic slump, not just year on year, but also on the disastrous final three months of 2008 when the overall market fell by £3.5bn compared with the summer.

In just a year the overall residential property market in Scotland has shrunk by almost 60%, the average house price is down 9% and areas traditionally seen as "hotspots" are witnessing unprecedented downturns.

Edinburgh and East Renfrewshire have both recorded year-on-year average house-price dips of around 10%. In Glasgow the average house is now 13% cheaper than the same time last year.

Of course, it is easy to read the slump in the volume of sales as an indication of the unwillingness of home- owners to sell-up.

Unless of course they have to, which some believe explains the downward trajectory of properties at the top end of the market.

Although statistics prior to the batch released in February gave no indication of how specific types of properties were faring in the market, the latest figures show just how badly those at the top end are feeling the recessions.

In East Renfrewshire, home to some of Scotland's most affluent neighbourhoods such as Giffnock, Whitecraigs and Newton Mearns, a detached house is now almost one-third cheaper than at the same time in 2008.

According to some analysts the nature of the recession and its impact on the professional classes means many are selling up and down-sizing just to make ends meet.

In theory though lower prices should oil the wheels of the market, putting the previously unattainable within reach, with more and more buyers believing value has returned to property and becoming interested in buying.

But the restriction of lending and the higher deposits required mean that for many buyers it is more expensive and difficult to get on the market now than 12 months ago. The buyer is willing but the finance is weak.

While 90% loan-to-value was commonly available in 2008, 75% is far more commonplace now. This is particularly acute for the first time buyer potentially creating an anchor on the bottom of a sales chain. This contributes to low sales volumes not just buyers waiting for the market nadir, as many now feel it is an increasingly good time to buy.

It is exactly this which leads one economist with a handle on property matters to puncture the enthusiasm of the trade.

Professor David Bell, of Stirling University, believes it will still be some time before the impact of the banks lending to one and other, as they are beginning to do, will filter down to the public and reactivate the market.

By then though the impact of growing unemployment will have played its part too.

Professor Bell said: "While it's difficult to pick particular patterns from the figures, they do show that the economic downturn is across the board. There are somewhat more people in management and professional services affected than in previous recessions and they are the people living in the detached houses.

"Maybe they are trading down to fund expenditure.

"Unemployment continues to rise at a rate of 8000 to 10,000-per-month and businesses are still finding it difficult to get credit. These factors have an impact on the housing market, making it more difficult for people to pay their mortgages.

"The rate of decline may be slowing but I don't think the market has bottomed out yet. The banks have begun lending to one another again and that will have a positive effect on the supply of mortgages but it could be the end of the year before that becomes meaningful."

With few brave, or foolhardy, enough champions of the property market it is little wonder estate agents are vocally promoting their sector. Bill Cullens, chairman of Clyde Property, one of the biggest agencies in the west of the country, has gone as far as hailing the figures as "good news", an indication things are again on the up.

Detached prices in East Renfrewshire, he said, can be explained by a sudden glut of properties of that type coming onto the market in recent times while Falkirk is actually showing a rise.

Mr Cullens said: "The real decline in prices is around 15% to 20% over the past year or so, not 9%, but what these figures show is the geographic fluctuations. The new section of the M77 has left lots of infill sites taken up by developers and if these are not selling it reflects on the area overall.

"But Falkirk is doing well, with the figures reflecting what our office there is finding. It has great transport links to both Edinburgh and Glasgow, new housing, the town centre has improved and it's in demand."

Mr Cullens also said that as the lag between sales being agreed and the figures being compiled officially can be six months the statistics are already outdated.

"December was when we were on the skids and these figures are more reflective of last autumn than the first months of this year. Since December viewing figures in our Glasgow west end branch have increased 10-fold."

The lag is something others in the estate agency business believe gives them grounds for hope.

Simon Rettie, managing director at Rettie and Co in Edinburgh, said one welcome addition to the property market was the return of the "closing date".

He said: "The figures are what they are and can only be compiled from historic data but what is going on now is also relevant and we have to look at where we've come from.

"In recent weeks we've had a number of people in for the one property valued in excess of £2m. It's still cheaper than it would have been two years ago but it's the type of change in the market which will be reflected in the next batch of figures."

One agent added: "Don't under-estimate the role of the home report in this. It's holding people back from selling. But it could be a blessing in disguise, as with little properties coming on to the market we've got demand again and demand makes the property market tick."

The Herald

 
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