Property News with Bruce de Wert

Changes in the property market have been fast paced, recently and there is a fair amount of “doom and gloom” being reported, the latest being a report from Halifax showing house prices falling in the UK by 2.5% during March.

Most of this gloomy forecasting is, however, based on English market conditions and should be taken with a pinch of salt when looking at Scottish properties.

For instance, Halifax report that whilst house price inflation to the year end of March 2008 was 1% in England, it was 5.3% in Scotland. Most heartening is the news that Scottish properties showed a continued rise in price in March of 0.2%.

One must also always bear in mind the underlying economy is in good heart. There is still high employment, low interest rates and a shortage of property.

The crisis is in the provision of credit and this does mean that, particularly, first time buyers are hard hit because, for instance 100% and 110% mortgages are no longer available.Buyers will need now to put down a deposit to buy their property and the difficulties for them and for first-time buyers will have repercussions further up the market.

In addition, despite the Bank of England reducing the base bank rates, the lenders are charging higher mortgage interest rates because they, the lenders, have to pay higher interest on the money they borrow to lend on in mortgages.

For Sellers, there is something of a “double whammy”. Firstly, there are fewer buyers due to the difficulty in obtaining cheap mortgages and, secondly, there is reluctance on the part of buyers who can afford to move to commit, which is not surprising given the current uncertainties about future prices.

Most buyers, however, are also sellers. There is no shortage of properties newly on to the market. My personal view is that anyone with property on the market at this stage is likely to have to wait longer for their property to sell. The Managing Director of Right Move, the largest property internet portal in England, has said that sellers will have to take a more pragmatic view and price their property to sell. He is talking in terms of reductions of 10%. Halifax take a view of deflation in ‘single figures’ over the next year. My own view is that this is over-egging the pudding as regards Scottish Properties and, particularly Caithness properties.

Because Caithness has never enjoyed the phenomenal rates of growth seen elsewhere, this does mean that our prices are not high relative to the rest of the UK and so we should be sheltered from the worst of the effects of the current crisis. This is supported by research by Experia, who suggest that this area of the Highlands is at ‘average’ risk of experiencing negative equity.

Normally, at Easter, we have an influx of English purchasers. Sadly, they did not arrive in any numbers this Easter. I still hope that this was because Easter was unusually early but I may be guilty of wishful thinking.

I have also noticed that in offering for properties, my clients are being successful at the asking price and, on one or two occasions, below. I have not seen that for a very long time. On the other hand, I have seen competition for some properties and offers over asking for most.

Meantime, I think we should follow the sage advice of Corporal Jones and "Don't panic!"

Anyone who would like to comment or for this column to touch on any particular matter, please email me on bruce.de.wert@georgesons.co.uk.

Bruce de Wert has 26 years of experience and is now Principal Solicitor and Estate Agent at Georgesons, Wick and Thurso.

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