HOMEOWNERS in Scotland banking on a resurgence in house prices face a long wait as lenders remain cautious and buyers sit on the sidelines, experts warn.
Sales levels may improve slightly over the coming months, but prices are unlikely to move significantly in either direction, according to forecasts shared with The Scotsman.
House prices north of the Border flatlined in 2012, defying predictions of a fresh slump in values as the economy continued to struggle. But while some parts of the country saw something of a rebound, including large parts of the capital, property prices fell sharply in others. Of the ten UK towns to have experienced the biggest price falls in 2012, four were in Scotland, according to research by the Halifax.
Even in Edinburgh, where sales levels improved towards the end of the year, almost 80 per cent of properties sold were bought for below the home report valuation, according to ESPC.
Little is expected to change in the year ahead. Sales numbers may edge up in the capital, but homeowners expecting prices to rise significantly will be disappointed, according to David Marshall, business analyst at ESPC. “Economic conditions should show some modest improvement compared to 2012, but this improvement comes from a low base,” he said.
The Royal Institution of Chartered Surveyors Scotland was similarly cautious, although it believes sales levels are set to pick up. The average house price will remain around the same level, said Rics, even though the number of homes sold north of the Border is likely to hit a five-year high over the coming 12 months.
“We expect the number of transactions to rise by 4 per cent, moving up from 74,000 in 2012 to 77,000 in 2013. To put this figure in some context, total sales in Scotland in 2007 were close to double this at 148,000,” it said.
Estate agent Rettie & Co believes the increases in the number of homes sold will be more modest, while it predicts house price growth of 1.5 per cent at best.
Demand remains subdued, especially among first-time buyers struggling to secure mortgage finance. Mortgage availability has improved in recent months, while government and developer initiatives have sought to boost first-timers. Yet those with small deposits continue to be hampered by limited bank lending, said Dr John Boyle, head of research at Rettie.
This is unlikely to change over the coming year, he warned, while the supply of homes for sale is also a problem. “The banks are still unwinding many of their property market exposures and many mortgages – around one in eight nationally – are in some form of forbearance,” said Boyle.
Alison Mitchell, mortgage expert at Robson Macintosh, agreed: “In the short term, I think if we expect much of the same, then we won’t be disappointed,” she said. “Expect too much and it will feel like the crash all over again.”
Some are more upbeat, however. Robert Carroll, managing director and solicitor at MOV8 Real Estate in Edinburgh, believes the year ahead will bring house price stability and a marked increase in the number of homes sold. “There has been a general improvement in confidence in the property market,” he said.
“Interestingly, the number of buy-to-let buyers has risen quite significantly, suggesting that investors believe that the market has ‘bottomed-out’.”
