Scotland in position to lead the UK’s property revival, says ELPG
Thursday, November 13th, 2008
on behalf of ELPG
Scotland could be the first area to recover from the ongoing slowdown in UK property markets, according to a group of leading solicitor estate agents.
The ELPG group has highlighted recent statistics showing that property sales are rising in Edinburgh as an indication that Scotland is in place to lead to the UK’s property revival.
Figures from the ESPC have shown that property sales have risen by around 50 per cent in the Capital, from 99 sales to 142 between mid-September to mid-October.
One ELPG member, Warners, has also revealed it is currently selling around £2 million of properties per week – twice as much as it sold during the summer.
The ELPG believes that, because of the statistics and the fact that better mortgage deals have become available and conditions are more favourable for first-time buyers, Scotland is in a better position to recover quickly compared to the rest of the UK.
The group, which is made up of five of the leading solicitors from Edinburgh and the Lothians, argues that the Scottish property market is unique from the English system as it uses missives rather than a “subject to contract” procedure – meaning each transaction on the property chain is insulated from the next and so removing the risk of a series of deals all falling down at the same time.
And they add that that, if more first-time buyers become attracted by the wider availability of mortgages and the ability to secure a home for below its fixed price, it could help Scotland lead the way to a recovery in the property market.
Leslie Deans, senior partner of ELPG member firm Leslie Deans & Co, said: “Things are now considerably better than they were six weeks ago. Liquidity and the flow of fund have improved and it is a lot easier for people to get mortgages, as there are a lot more deals around than there were.
“Although the days of 100% mortgages are gone, more lenders are back to offering 90% mortgages and as the bank base rate has dropped again, it had made buying a house even easier.
“Even those people without a deposit can receive help through the government’s LIFT scheme or look to go into co-ownership with friends, family or the ‘bank of mum and dad’, so it is a very good, and affordable, time to buy.”
Recent figures from the National Association of Estate Agents has shown that sales from first time buyers have increased from 8.3% to 9.5% between August and September of this year.
Statistics from the Edinburgh Solicitors Property Centre (ESPC) have also shown that 75 per cent of fixed price properties have been sold for less than the fixed price, making buying a property an increasingly attractive proposition for first-time buyers.
Now the ELPG group, which consists of Warners, Neilsons, Drummond Miller, the Lints Partnership and Leslie Deans & Co, has advised first-time buyers to take advantage of the chance to secure their first-choice property at below its fixed price, as many sellers are waiting to receive offers before purchasing and there is a higher choice of properties to choose from.
Scott Brown, Estate Agency Partner with Warners, said: “Forward thinking sellers are prepared to consider lower offers because they know that they are then free to offer reduced prices further up the market in order to compensate for the drop they take on their sale.
“Recently, we have seen house prices dropping for the first time since ESPC records began and they are currently standing at an average level of around 10% less than their height in the third quarter of 2007. And, as there is a far greater supply of properties than demand, it means there’s more chance you will get your first-choice home at a bargain price if you buy now.
“However, it’s likely a tipping point could be reached soon that would lead to a surge in demand and immediately create more competition for homes and drive prices back up.
“The respected Centre for Economics and Business Research predicts that in the UK after price falls, house prices will surge by 2011 wiping out recent falls. This will create a substantial profit for buyers prepared to enter the market now.
“If you had been buying this time last year, when the market was at its peak, you would have been competing against a dozen other people and would have had to pay well over the asking price to secure your first-time property. Now not only are you very likely to be able to secure your first choice property, you may well be able to secure it at below the fixed price.
“The market is down at the moment but that will not last forever and with the Bank of England recently dropping interest rates by 1.5%, the question of whether to buy or rent becomes obvious. Rents in Edinburgh are increasing whilst the cost of your mortgage is likely to fall very quickly in coming months.
“If first-time buyers enter the market now, it will cause a domino effect along the property chain by freeing up the sellers of entry level properties and allowing them to make their next move along the ladder.
“Each first-time buyer purchasing a home could potentially spark a succession of transactions further up the chain, which could ultimately lead to Scotland’s property market recovering before the rest of the UK does.”