Property News with Bruce de Wert

When talking about the current property market, it is difficult to know where to start as there is so much going on - and yet so little going on.

So the first port of call should, perhaps, be a statement of what is selling. Land, any amount of land, can be sold readily as investors look for a safe place to put their money. They are not interested in farm buildings, just the soil. They are not interested in plots but if you have a few acres of undeveloped land without planning permission, you will find no trouble in finding a buyer.

Properties under £80,000 are also selling reasonably well to cash investors.

Higher value properties are very sticky. Where the potential buyer needs a mortgage or to sell their own place first, the message is that you could be in for a long wait. It is not true to say that nothing is selling but sales are few and far between and, again, mostly to cash buyers.

And that is the message - Cash is King. I had hoped that, by this time, I would be able to report that mortgages were becoming easier to obtain. Sadly, following last week's horrendous events within the finance industry, the opposite appears to be the case.

Even the biggest banks are now threatened and have to show that they are financially sound. And that means garnering more deposits from investors and lending less. The knock-on effect is that house purchasers are finding it increasingly difficult to obtain an offer of mortgage. For example, one of my clients, having , originally, been told that there should be no difficulty obtaining a mortgage, having an excellent job, a 10% deposit and a good credit record was told, late last week, that the bank concerned was "not lending".

We all hope that the steps being taken by the American Government to buy up the "toxic debt" will open up the money supply. Whether it's the right thing to do or not for the US taxpayers, only time will tell but there is no doubt that if the Banks can remove the uncertainty of exactly what losses they face, they will start lending to each other and the financial merry-go-round can start whirling, again.

Of course, that relates to the US market and will only have a mild effect here in the UK but the Americans are trying to persuade other Governments worldwide to take the same steps. I do not know whether our own Government will do so but until our own Banks know exactly what debts they face, they are going to be very cautious in lending so, without Government intervention, I do not see the swift end to the current situation.

My own prediction is that six months from now, a semblance of normality in lending should be coming into view and that a year from now, the worst will be over. There are those who say that it will be some years before this occurs but I'm not sure if they are talking about price or lending. Prices are clearly going to be affected but I think lending should have been sorted out by then. It could well be quicker if the UK Government takes action but that will involve some considerable risk to the taxpayer and, probably, tax rises to pay for it. The Government is only going to do that if they fear a meltdown.

As for prices, they have, undoubtedly, been affected. The sales that are seen thus far are virtually all at either asking or below asking. This is hardly surprising since cash buyers rule and such buyers were, last year, only a fraction of the buyers in the market. Clearly when you have such a reduction in demand, prices are going to fall.

You can discount what you hear about price trends in other parts of the UK and, for that matter, Scotland. The Far North has always had it’s own market.

Of course, the prices that are being asked are still the prices that were expected when the properties went on the market some months ago. Advising clients about price is quite difficult because there is so much uncertainty about. If the government does take the same tack as the US government, the money supply will loosen, mortgages will become much more available and, assuming we can get some first-time buyers into the market, the situation may well change for the better. It is not that people do not want to move, it is just that they cannot do so because the current situation. If that pent-up demand is released, prices may stabilise here in the Far North, particularly since our prices are relatively low anyway.

As they say, we can only "watch this space".

I will write on the awaited (or is that dreaded) Property Information Packs in my next column.

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

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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