One of Scotland’s leading solicitor estate agents has suggested that the housing market will start to show the first signs of recovery when the Bank of England levels out interest rates.
As he predicts what lies in store for the Scottish property market in 2009, Warners’ estate agency partner Scott Brown says that there needs to be up to three months of steady interest rates before house hunters start looking to buy new properties.
Scott believes that buyers will be encouraged to enter the market if interest rate levels are kept steady for a minimum of two or three months – as they will not be tempted to put off their purchase in order to see if the base rate drops further.
He said: “Although the recent cuts in interest rates have been a good step in trying to re-invigorate the economy, there are many people who are waiting to see if they will fall further before they choose whether to buy property or not.
“If we have a couple of months where the rates stay unchanged, I think it will stir people into taking action. They will see that the Bank of England doesn’t plan to drop them any lower and will want to take advantage of the favourable rates before they start going back up.
“At the moment, I think we’re close to the bottom in terms of house prices though there may still be further downward movement prior to recovery commencing, so it’s all just a question of when people start buying again. When we reach the bottom of the curve I think prices are likely to plateau for a while before things start improving – but it’s still too early to tell how long that will take to happen.
“Although the Government and even the banks have recently been offering assurances and help to homeowners, we still have situation where there is little confidence in the market. The economic climate has meant that many people fear losing their jobs and are not looking to move, while potential first-time buyers cannot get the funds to buy a home of their own.
“When interest rates level out, I think there will be quite a few people looking to enter the market but this has to coincide with better mortgages becoming available. Until the banks and lenders start to offer mortgages of more than 75% at reasonable rates, which will encourage first-time buyers and spark further transactions along the property chain, I do not think there will be much recovery in the market.”