Confidence boost needed for first-time buyers
Thursday, October 9th, 2008
on behalf of ELPG
Many first-time buyers are poised to climb on the first rung of the property ladder with the recent reduction in interest rates set to provide the perfect spur to enter the market at what is a unique time, according to the ELPG group of leading property solicitors.
The ELPG points to the success of the last two ESPC first time buyers’ events which provided solid proof that a significant wave of single people and young couples are planning to make their move in the market.
The first event in the ESPC’s George Street office in Edinburgh attracted 68 individuals and couples keen to find out more about getting on the property ladder from solicitors, financial advisers and property experts, while the second evening attracted 72 attendees.
And of those who turned up at the two events, more than 70% of them had deposits and did not require a 100% or 95% mortgage – the factors which are normally reported in the media as holding back first time buyers from purchasing.
The ELPG is made up of five of the leading solicitors-estate agents in Edinburgh and the Lothians – Drummond Miller, Leslie Deans & Co, The Lints Partnership, Neilsons and Warners. Together, they account for 25% of all properties sold in Edinburgh.
The ELPG now believes confidence needs to be instilled in first time buyers to ensure the ‘domino-effect’ inherent to the success of the property market can happen.
Steve Spence, Senior Partner at ELPG member firm Neilsons, said: “The fact that these events attracted 68 and 72 potential purchasers respectively, shows the high levels of interest from people wanting to get onto the property ladder.
“Many of them were well advanced in their plans with sizeable deposits in place and no need for 100% mortgages. At the first of these events, I spoke with four people who had upwards of £10,000 deposit and two more who, despite having limited savings, were eligible for the Government’s LIFT scheme which allows buyers to proceed with very little in the Bank.
“This shows that there is a new wave of first time buyers who are not wanting to pay rent but want to get on the property ladder.
“But the main thing that is holding back these potential buyers, who are vital to getting the market moving, is a lack of confidence fuelled by the constant media reports of the market being in freefall, and a supposed mortgage famine.
“Many of the difficulties in the Edinburgh and Scottish market are being caused by scaremongers who are incorrectly applying what is happening in England to Scotland.”
The Scottish market is completely different to the English market both in law and in practice. In England long chains of transactions develop because of the “subject to contract” procedure. The whole chain moves at the speed of the slowest and one purchaser having a problem with mortgage approval can bring down the whole chain. The English market could take years to recover from its current difficulties.
In Scotland the missives system means each transaction is insulated from the next so that the Scottish will pick up much faster when the first time buyers regain confidence in the market.
Steve added: “We need first time buyers to see that, despite what the national media may say, this is a great time to buy. Once that happens, the domino effect will kick in and we will see a rapid return to properties being bought and sold in the wider market.
“If we look at the facts, there still is a willingness among people to buy and sell in Edinburgh – there are record numbers of properties on the market but home owners are waiting to receive an offer before committing on the next purchase.
Whilst the range of mortgages has been considerably reduced and mortgage lenders are more strict with their lending criteria, mortgages are in fact readily available.
“What’s more, the current market is putting many first-time buyers in a great position as they can benefit from the greater choice and lack of competition.
“With average prices in Edinburgh down by around 7% on last year and many sellers prepared to take a further drop in price to secure a sale, this is a great time for first time buyers to get on the property ladder.
“ESPC statistics show that last month 70% of properties advertised at a fixed price were actually sold for less than the fixed price and even “Offers over” property are achieving around half of the premiums achieved this time last year.
“Don’t forget, the Government predicts that the shortgage of new build property being completed as a result of the credit crunch will result in an increase in demand for homes in the second hand market from an increasing population as early as next year.”
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