Given that we are now into the sixth month of the year, I thought it would be useful to give you a market overview. The positives for the first five months are that overall the Scottish property market continues to increase in activity. There has been an increase in the properties being listed on the market, a definite increase in sales compared to 2011 and there have been less repossessions coming onto the market. If we divide the property market between East and West we see the West still behind the East in terms of property market recovery. The East Coast, Aberdeen in particular, leads the way, with Dundee and Angus showing a good increase in activity and Edinburgh also showing signs of a pick-up.
The Blackadders’ property team has exceeded target each month so far in 2012 and we have a very high level of settlements in June. In terms of the legal profession, the public seem to be willing to pay a slightly higher fee to gain the experience of a property professional and are returning to their trusted legal adviser and specialist solicitor estate agent.
However, there is a down side. The debt crisis continues to rumble away in the background and the faltering recovery in the Eurozone and the related bad press is starting to have a negative impact on both commercial and private clients. I have noticed a tightening in criteria for all mortgages and it is extremely hard, if not impossible, to get funding for any form of property development. Although I have not seen any official figures, the number of first time buyers in the market continues to drop and my guesstimate is probably around 10% of purchases are first time buyers, considerably below the 40% level required for a healthy property market. This is caused by the general economic climate but also, and more predominantly, by the lack of products available to the first time buyer. 95% mortgages have been withdrawn for all but a very small minority of lenders. This is leading to a very unhealthy property rental bubble with former first time buyers being forced into renting properties at ever increasing rents and way above any mortgage payments that they would normally be making. There is currently an imbalance in the property market that requires to be sorted – further blogs to follow in relation to this.
I will monitor the levels of listings at the end of June to see if the Greek election and the subsequent economic summit has made people hang back. The next key date will be the middle of August which is when the majority of the Scottish schools return from their summer holidays – this is usually when we see a rise in property market activity through until the end of October. I do believe the long-term outlook for the property market in the UK in general, and Scotland in particular, is very strong – there is a shortage of properties being built, there are more and more people looking to buy properties and there is a huge pent-up demand which at some point will require to be filled which will lead to another property boom. We are currently on a knife edge and the rest of 2012 could either go one way – continued improvement, increasing activities and strengthening prices – or the other way – stagnation, no activity, no mortgage lending, faltering prices.
I will continue to report on these trends and welcome your comments.Lindsay Darroch Partner & Head of Property