Investors take advantage of Scottish house price fall
House prices in Scotland have fallen 3.7% over the last year, according to the latest survey.
And canny overseas property investors are picking up some bargains, says one commentator
The new LSL/Acad Scotland House Price Index shows the average price House Price of a home in Scotland was £142,246 a drop of £5,458 in the 12 months to October – the largest decline since November 2009.
But the good news is that October sales volumes are 24% up month-on-month, the highest rate for the last five years.
Adam Jones, of Wriglesworth consultancy. told OPP Connect, “There is interest in Edinburgh from overseas property buyers. It is like the London market, but on a much smaller scale.4
“The prices are remaining robust thanks to foreign investors who don’t need mortgages and have quite a bit of equity and are snapping up property.”
Looking ahead during 2013, the performance of property prices in Scotland was likely to be linked to the strength of the economy and the likelihood of domestic first-time buyers getting mortgages. “However, if prices are kept lower, overseas investors look for bargains.”
Richard Sexton, director of e.surv chartered surveyors, part of LSL, says, “At first glance, sales increasing by almost a quarter between September and October looks very encouraging, suggesting more lower income buyers are finally getting a foot on the property ladder.
“But, in actual fact, a spurt of activity from residential landlords drove the increase. Terraced property and flats are particularly cheap by historic standards, largely because the first-time buyers who would typically buy them can’t get a mortgage, so landlords are taking advantage and snapping them up at bargain prices.”
He says prices have been dragged down over the past year because the property market is riddled with chronic structural defects that have persisted, and in some cases worsened, since the financial crisis.
“Mortgage finance is painfully restricted. Disposable income is low. And consumer confidence has been cut to ribbons. High LTV lending has dried up compared to its historic levels, which has slashed first-time buyer numbers to less than half the level before the financial crisis because new buyers simply can’t get the finance they need to buy their first home.”
First-time buyer numbers this year are 10% higher than last year, but the same as they were in the equivalent period in 2010, which was hardly a strong year. “It’s certainly far too early to start proclaiming a sustained improvement in first-time buyer activity.”
Since last October virtually every region across Scotland has seen prices fall - even Edinburgh , where they dropped 3.6% annually.
The LSL/Acad Scotland House Price Index survey uses actual prices for residential property transactions in Scotland, including prices for properties bought with cash, using the data provided by Registers of Scotland.