Warners believes that property prices across the country are likely to remain flat for the remainder of 2010 due to a combination of dwindling confidence among homebuyers, restrictive lending criteria and a surplus of properties being put up for sale.
The firm says that many would-be homebuyers are being prevented from entering the property market due to tight mortgage restrictions imposed by lenders – and this is limiting further transactions along the property chain.
It also believes that buyers and sellers are now becoming more realistic about the prices they expect for their properties, which is keeping house prices level throughout the country.
Scott Brown, estate agency partner at Warners, explained: “Although some reports are suggesting that the property market in Scotland is continuing to improve, the reality is that property prices and transactions are quite flat at the moment – and this is likely to continue for the foreseeable future.
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“Lending is still a major issue at the moment, as the banks have tightened their restrictions on mortgage borrowing. Many first time buyers simply cannot afford the necessary deposit needed to secure a mortgage so they are choosing to rent homes instead – and this is stifling the property sales market.
“Confidence among buyers and sellers is also quite low at the moment. In Edinburgh, for example, many public sector and financial workers are choosing to sit tight until the economic climate improves rather than looking to move along the property ladder.
“I believe it is highly unlikely that confidence will return until the economic climate improves and people are satisfied that their jobs are safe – so it could be some time before we start to see any further recovery in the property market.”
Scott adds that there is also a surplus of properties currently for sale in Scotland, which is contributing to keep house prices level.
He said: “The supply of property has been gradually increasing over the past year – thanks, in part, to a surge of confidence at the start of 2010 when reports suggested the recession was ‘over’, many people saw that prices had stabilised and decided to put their homes up for sale to take advantage of the more favourable market conditions.
“However, this has merely led to a situation where there are far more sellers than there are buyers. For example, earlier this year espc.com had approximately 7500 properties listed for sale – but this figure now sits a shade under 10100. Supply is outstripping demand in the local market and when this occurs, there are two possible outcomes - prices falling and the market slowing.
“My own view is that there's about 20 per cent too much property on the market and that is a cause for a slowing of sales and slight price falls. I believe that trend will continue in the short term.”
However, despite the current market position, Scott believes that there are still positives for buyers and sellers – provided that they remain realistic in their expectations.
(GK)
