First Time Buyer Update

I was very interested to read a report from the CML (Council of Mortgage Lenders) advising that there was increased activity in the first time buyer’s sector in November 2012.  The CML advised that the number of loans taken out by first time buyers was 21,700, up 8% on October and up 24% on November, 2011The CML advised that loans to first time buyers accounted for 41% of all house purchase loans.

As readers of previous blogs will know, for a free moving property market the number of first time buyers needs to be in excess of 40%.  The CML figure certainly accords with the increased levels of activity that I saw at the tail-end of 2012.  It will be interesting to see if these figures are sustained and my feeling is that they will be.  I will continue to keep you advised of trends.


Lindsay Darroch
Partner &  Head of Property

RICS Predictions

I was interested to read a recent report from the RICS advising that in the month of December, 24% more surveyors predicted transactions to rise rather than fall over the next quarter.  The report also advised that prices held steady during December, which is the first time since June 2010 that the national price balance has not been negative.  The RICS also advised that the number of house prices coming up for sale remained stable and they predicted a 2% price increase during 2013.

I feel that this is another positive step and points towards an increasing confidence in the property market.  Another step in the right direction and I am very interested to compare Quarter 1 2013 to Quarter 1 2012 which I think will be the next real indicator of market activity.


Lindsay Darroch
Partner & Head of Property

Increase in First Time Buyer Products

Following on my review of 2012 and predictions for 2013, I have been astounded by the number of 95% products that have started to come on the market.  There is definitely a feeling that lenders are starting to release the taps and become more sensible in relation to the products and requirements in relation to lending.  This can only be a good sign and further fuels my feeling that we are going to see an increase in activity during the course of this year.  Interestingly, Retties have just announced their predictions for 2013 and they are predicting Scottish prices rising between 0.5% and 1.5% and activity levels increasing by 2%.  Any report that is positive is a good thing, and I do agree with them in relation to house prices but I am hopeful that we will see a larger increase in activity levels, although their figure is Scottish-wide and there is still very much an east-west divide in Scotland.   I will continue to keep you advised of trends.


Lindsay Darroch
Partner & Head of Property

Property Predictions for 2013

I have recently reviewed my January 2012 blog and my predictions for that year. Interestingly if I average out the statistics from government and other organisations and our own Property Team’s figures the outcome for 2012 was as predicted, much the same as 2011 with both activity levels and price levels remaining stable. However, the shape of the graph went slightly array and I will focus on this before moving on to my predictions for 2013. Quarter 1 and the start of quarter 2 showed that activity levels were  between 15% and 20% higher than 2011, from May to the end August i.e. the remainder of quarter 2 and almost all of quarter 3 activity levels were subdued at some points dropping below 2010 levels.  September saw an increase in activity with October, November and December all being very strong performing months.

My feeling is that the shape of this graph shows early year optimism quickly fading with the battering of negative headlines in relation to the problems with the Euro, the sovereign debt crisis, the state of the American economy and the lenders general unwillingness to lend on any property related transaction without a huge deposit.  These factors coupled with the public sector cuts and continued job uncertainty led people to pull in their horns during the summer months.    In September and October I think we start seeing the impact of some of the government schemes to force the Banks to increase lending and perhaps a general increase in confidence.  A recent report from the Council of Mortgage Lenders indicates that the number of first time buyers is at 3 year high and lenders appear more willing to offer mortgage finance to those wishing to purchase their first home with a lesser deposit.  Readers of previous blogs will know the importance I place on first time buyer activity in the property market. Given the outcome I would score myself 7/10.

Onto 2013 – speaking to a number of people involved in the global financial market the feeling is that the American economic recovery is starting to speed up and the expectation is that by the summer of 2013 the recovery should hopefully be at full speed.  I think that the impact this will have on the UK is that there will be a general freeing up of the global credit market making it easier for Banks to access funds, resulting in an increase in confidence and the feel good factor should return to our economy – the caveat to this is that there are no more bad headlines from the Euro Zone – although I note comments by the European Commission President Jose Manuel Barroso on 7 January 2013 advising that the threat to the Euro has been overcome and that 2012 was the watershed year for the Euro.

In relation to activity levels I anticipate quarter 1 of 2013 being similar to 2012 with each quarter thereafter showing increased activity levels on 2012.  In relation to prices I expect these to remain stable with perhaps a slight increase in average price but certainly with anticipation that prices have reached the bottom and will from now on slightly increase.

I believe the drivers for this increase in activity will be increased confidence amongst lending institutions and the government schemes encouraging lenders to lend more especially to first time buyers.  This increase in confidence will free up lending but also see new lenders coming into the market.

The increase in lending will especially impact on first time buyers, the life blood of a healthy property market, although I am of the view that the government could do more to assist first time buyers. Another driver of the housing market in 2013, especially in the first 6 months, will be private property investors coming into the market on the basis that they are getting good deals for their money and that prices have stabilised and will start increasing.  This corresponds with an increase in property investor activity at the end of 2012.  I also think that with an increase in lending we will see more developers either returning to the market or increasing their build output. Again this is backed up with a corresponding increase in activity at the tail end of 2012.

I think that 2013 will be the transitional but positive year for the Scottish housing market with the second half of 2013 pointing towards a further increase in activity in 2014.

In relation to my wish list interestingly it follows the same pattern as 2012: –

  1. More assistance for first time buyers.
  2. Tax break for property investment.
  3. Increase in funding provision for housing associations for the provision of social housing.
  4. The abolition of Home Reports in Scotland.

In relation to the legal profession in Scotland I see another year of huge change with more mergers, takeovers and closures – I will report on this in another blog.

I am looking forward to an exciting year with lots of opportunities, an increase in activity in the housing market and improving economic conditions. Whatever happens I will ascertain to report on trends in the property market and I take this opportunity to wish all the readers of this blog a happy and prosperous new year and look forward to communicating with you further during 2013.

Lindsay Darroch
Partner – Head of Property