Posts Tagged ‘housing market’
Monday, January 25th, 2010
At the start of each year it is fashionable for commentators to predict the trend they expect to see in the housing market. Already some agents seem to be suggesting a significant improvement in the market. Of course it depends on what basis you judge a market. Much of the property press seem to be obsessed by the price of residential housing and that if people have to spend more to buy a house in Scotland in 2010 than in 2009 then this is the market “improving”.
At Caesar and Howie we do not really subscribe to that view. First and foremost houses are for families to live in not simply investments. We feel the number of successful transactions in the market is a much better indication of the health of the market rather than increasing prices. Consequently, whilst it does seem that the house price falls of the last two years are over – we do not think that the market is showing much sign of returning to good health. Good health for us is many buyers and sellers doing deals and in truth volumes remain very slim compared with the highs of 2007. Register House has not yet published final figures but sales in 2009 will probably come in around 67,000 or so compared with 155,000 in 2007.
The cost of Home Reports has clearly chased many sellers away from the market with listings for sale down all over the country since this policy was introduced by the Scottish Government.
We cannot see the sentiment of sellers changing much this year, and whilst there is still a strong desire to own property in Scotland, mortgage deals are still generally dependent on good deposits being available – and not all buyers can manage that.
So we believe the market will remain subdued in 2010. This means sellers have to be realistic on price, and to be patient, to achieve sales in 2010. Selling your house first before purchasing is the safest course to take – even being prepared to move into temporary accommodation between dates of entry. But buyers who had sold and had. “money in the bank” so to speak were able to press for a good deal buying houses in 2009 and we believe it will be the same this year.
We may be coming out of recession but many still fear for their jobs. We think until it is absolutely clear that the economy has turned round and individuals and families become more confident the number of house transactions is likely to stay modest. We doubt if house prices will increase across the board – although there may be the odd “city centre” hot spot. That does not mean that individuals cannot trade successfully in the market. But careful thinking, good professional advice and prudent decision making will be the order of the day to make this market work for you.
Tags: housing market
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Tuesday, December 8th, 2009
According to the Scottish Executive and Consumer groups Home Reports were intended to revolutionise the Scottish house market for the better. Ignoring the results of its own failed trial, the Executive pushed ahead against reasoned opposition and sensible requests for delay, and made the commissioning of a Home Report compulsory on domestic property sales from 1st December 2008. The results have been spectacular.
- GSPC is the premier house selling organisation in the West. Their listings dropped by 80% in the month after the introduction of Home Reports. They have remained resolutely at about 50% of 2008 levels ever since.
- ESPC is the premier house selling organisation in the East. Their registrations dropped by 80% immediately after the introduction of Home Reports and are cumulatively down about 52% in 2009 compared with 2008.
- Solicitor Property Centres and Estate Agencies across the country have recorded similar figures.
- House sales recorded in the Land Register dropped dramatically in January 2009 by 64 % from the 2008 figure.
- House sales recorded in the Land Register to end October 2009, the last date on which figures are available, are running at 5503 per month compared with 8571 per month in 2008. That is a massive fall of about 36%. And remember 2009 sales will have been artificially inflated from “Normal” by purchases under the Lift scheme and by the stamp duty holiday.
On any logical view of the house market and these figures it is clear that Home Reports have had a significant deleterious effect. If the rules of a market change on a particular date and from that date activity levels collapse I think it fair and reasonable to conclude that the rule change has affected activity. Our own experience in Caesar and Howie on volumes is typical and the chaos caused by this legislation is reflected in our daily work.
- Our listings halved in number from precisely the date of the introduction of Home Reports and have not yet recovered.
- Multiple surveys had been unknown in our firm for years until the introduction of Home Reports – now we are aware of them happening all the time – and who pays for them is often a cause of dispute.
- House Purchase and Sale transactions are taking longer and are usually more expensive for both buyer and seller.
- Many sales clients have complained bitterly to us about the cost of Home Reports, many buyers do not trust the sellers Home Report and lenders frequently reject the Home Report and require their own survey to be done.
- Potential sales clients have simply said they would rather not sell than meet the cost of a home report in a slow market.
- Sellers and buyers alike treat Energy Performance Certificates (part of the Home Report) with open contempt and see them as worthless.
- In many Home Reports, some, and even most of the questions in the Property Questionnaire section are answered “don’t know”.
- Sellers in financial difficulty who cannot get credit are selling “off market” often well under valuation because they cannot afford the Home Report and they therefore cannot put their house on the market.
In the face of our experiences and the figures I have quoted I am at a loss to see how any objective view of Home Reports could fail to confirm that they actually hinder the house market not help it. We have had a recession since early 2008 and yet the largest falls in listings and sales have come since the introduction of Home Reports – most markedly so. Many commentators predicted aspirational sellers (in our view the majority of sellers) would leave the market if it became too expensive to sell – and they have done just that, in their thousands. Every aspirational seller is also an aspirational buyer – which is why chasing this group from the market by ratcheting up the price of entering the market was such a daft policy decision. Indeed I wrote to Alex Neil, the Housing and Communities Minister, and all MSP’s advising that Home Reports would decimate the market and cause redundancies throughout the property and mortgage sector as well as in areas where trade relies on house transactions such as furniture shops, carpet shops etc. Such closures and redundancies throughout Scotland are now well documented.
As an aside, it seems pretty remarkable to me that a policy introduced to stop the non-existent problem of multiple surveys can actually cause multiple surveys and still be declared to be a success by our Housing and Communities Minister. If this mess is a success what on earth would constitute failure?
Sadly Home Reports were conceived in a Fantasy Land peopled by politicians, consumer “champions” and surveyors, with a sprinkling of a few non-representative lawyers. In Fantasy Land the 250,000 or so Scots who bought 155,241 houses in 2007 (and similar numbers in the years before that) were all hapless victims, recklessly spending their hard earned money on houses they knew absolutely nothing about. All these unfortunates apparently quite unwittingly bought “pigs in pokes” which might ruin their lives forever. This upset the consumer organisations and politicians who always know much better than the actual buyers themselves how and in what way they should spend their money. Oh and of course, these silly buyers were racking up about 5 survey fees a purchase as well. Of course in Fantasy Land it was all just that – pure fantasy.
Without wishing to be offensive I see from a recent press release that the proponents of Home Reports remain happily resident in Fantasy Land congratulating themselves on how they have fixed the house market – which they surely have.
Home Reports have “benefited buyers and sellers over the last 12 months” – The RICS.
“Which is delighted the new system is working well” – Which.
“It’s good news for everyone” - Alex Neil Housing and Communities Minister.
Well it must be great to live in Fantasy Land, where propaganda trumps facts. For the rest us left behind, we have to live with the gritty realities of life, one of them being the worst property market in living memory, a market brought to its knees by compulsory Home Reports.
There is an easy fix to this shambles. Just remove the compulsory nature of Home Reports – get rid of the £500 civil fine for selling without one – so sellers can freely decide whether to commission a Home Report or not. Then we will soon see who is right in this debate – because members of the public will decide for themselves whether Home Reports are a good thing worth paying for or whether they are not.
Should anyone in Government, the RICS, Which, or Consumer Focus Scotland read this article I hope someone will publish their response.
To save the hard pressed the bother of having to read it – I can tell you now what it will be.
“It wisnae us – it wis the recession”. How convenient. At all costs the Home Report Project must be saved irrespective of fact, logic, job losses, or the economic damage it has done. Just wait and see.
Tags: Home Reports, housing market
Posted in Conveyancing, Estate Agency | 2 Comments »
Friday, November 13th, 2009
Figures from various sources confirm that the Scottish House market is changing a little, with prices stabilising and even starting to increase slowly again.
The Registers of Scotland – where every Scottish house transaction is recorded – state that prices have gone up in the third quarter (July to September) by 6.1% from the second quarter. That leaves the average price of a residential property in Scotland at £154,453. The national average figures of course disguise significant regional variations, and in six local authority regions prices were still shown to be falling. The biggest rise was in Perth and Kinross at 15% and the biggest loss was in Renfrewshire with a loss of 3.7%.
The picture therefore remains very mixed but at least after two years of bad news clearly there are some signs of a market returning to health. Solicitors and estate agents, however report that trading volumes are still down and this is confirmed by the Registers who state that five thousand less house transactions took place in the third quarter this year compared with 2008.
Kirsty Jack, Property Manager at Caesar and Howie and who works closely with the Kupdom Project states “There are clearly some positive signs but our sales volumes remain at about half the level of two years ago. I would say however that there are many people who would wish to buy but who still cannot get mortgage finance. The house buying culture is still strong in Scotland and as the financial world slowly returns to normal I predict a slow improvement in prices and sales volumes over the next few years. People buying a house now, I think will look back in a few years and think they have got a bargain”.
Tags: Buy a house in Scotland, House Prices, housing market
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Monday, September 28th, 2009
The last few months have seen first time buyers back in the house market with a bit of a vengeance. After over a year when first time buyers were almost an endangered species many more have taken the plunge recently.
Three issues have favoured buyers in this category. First there has been a ready supply of first time buyer properties, mostly flats, with sellers anxious to sell and willing to do a deal on price. Secondly the LIFT mortgage programme solved the funding problem for many first timers – with the government though housing associations – effectively providing and interest fee loan for the deposit. Thirdly the stamp duty “holiday” granted by the chancellor cut the cost of buying flats at the entry level to the market. All in all for the last several months first timers have had things pretty well there own way.
All good things must come to an end as they say and the signs are first timers are not going to enjoy these advantages going forward. Kirsty Jack senior property manager at Caesar and Howie has noticed prices firming up in the flat market. “Sellers have quickly reacted to the increase activity in flat sales, with less now desperate to do a deal at any price – in fact some closing dates are even creeping back in with there being more buyers around”
On the mortgage and stamp duty issue things are changing a little for the worse. Sandy McFarlane long time mortgage advisor at Caesar and Howie warns “ I think the ready supply of Lift funds is beginning to run out in some parts of the country – especially in the Lothians. With that and the Stamp Duty holiday ending in December I would say first time buyers need to move now to take advantage of Lift and not having to pay stamp duty. These benefits are not going to be around much longer – so first timers need to move now to make the most of them whilst they last”
Tags: First-time buyers, housing market
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Monday, July 20th, 2009
Caesar and Howie property experts report increased activity in the Scottish Property market. For over two months now transaction levels have increased following the firm noticing increase viewings from April this year.
Managing Partner David Borrowman reports “we are now beginning to see the increased viewing levels of four months ago turning into actual offers and sales.
Whereas in the last six months of last year our transaction numbers were down to 30% of normal levels they are now back up to 60% and look to go even higher in the coming months.”
There are two principal factors helping the recovery – the first is the increasing availability of mortgages. Sandy MacFarlane Caesar and Howie’s most experienced mortgage advisor comments “Whilst mortgages are still a little tight to get – they can at least be got now – whereas at the end of last year there was virtually a moratorium on mortgages. Also the Lift mortgage initiative has also helped bring first time buyers back into the market for the first time in nearly two years. That’s a big change and of course every time first time buyer snaps up a property the person that sold that property usually buys another – so the whole market is stimulated. To be honest I have never been this busy in years – and it is mostly with Lift mortgage applicants.”
The flexibility of the Lift scheme is another benefit continues Sandy. “Some buyers think that you can only buy houses built by Housing Associations – but that is a complete misconception. You can of course buy from an Association but you can buy on the second hand market too and you can even buy a new property from a private builder – so all areas of the market are covered by the scheme”
Another feature which is helping the market move forward is a new realism in the approach of sellers to setting prices. Property Valuer John Renton has noticed a distinct change here. “When the recession first struck, the property market pretty well seized up. At first sellers did not respond to the new conditions and kept trying to price their property as if a boom was still on” says John. “But at last things have changed and most sellers are realising that it is the keenly priced properties which are shifting, and prices have of course gone down in the last 18 months. If you are buying on, of course the house you buy will have gone down too – and folk in the market are beginning to respond to that. As well as that there is no doubt there are some bargains to be had out there”
The experience of Caesar and Howie seems to be shared elsewhere and whilst it is never safe to predict too much in the property world the consensus among the professionals seems to be that the worst is over.
Tags: housing market, Scotland
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Monday, June 22nd, 2009
The Low Cost Initiative for First Time Buyers is proving an attractive option for some first time buyers – and is bringing more activity to the housing market – at least that is the view of Caesar and Howie property experts.
Experienced mortgage broker Sandy McFarlane of Caesar and Howie comments – “I have never been busier on the mortgage front – mostly with LIFT cases. We have learned everything there is to know about LIFT mortgages and provided you know and understand the criteria you can access LIFT funds as a deposit for first time buyers. This will help meet the continuing demand for young couples in particular to get on to the housing ladder”
The scheme which is operated through housing associations effectively means you are gifted a percentage of the purchase price as a deposit – provided on a future sale the same percentage is repaid. But with no interest payable this is an attractive proposition for many first time buyers who might struggle to save up the deposits now required by lenders.
There is a price limitation however – as the scheme is intended to stimulate the first time buyer sector of the market. Experienced property consultant at Caesar and Howie Vivienne Malcolm explains that the limits can sometimes be restrictive but do work. “The key thing is to know the price range in your local area – you can get these on the LIFT section of the Caesar and Howie website. Once you know the range you can concentrate on finding a property within it – and with lots of properties going under the asking price you would be surprised what can be bought under the scheme. And another benefit is that the scheme covers second hand and new properties – and some developers with the reduced prices they are seeking – have available new properties which qualify. I think with sellers willing to do deals – it can be win win for some first time buyers using the LIFT scheme.”
With sixty million pounds available to be lent under the scheme maybe up to 2000 purchases could be carried out using these funds. Managing partner David Borrowman comments “This is clearly a help to the market at this time – it has been the lack of first time buyers over the last 18 months which has slowed things down. If this group were to get buying again it would get everything moving since the sellers to this group would presumably also purchase.”
To find out more please contact 0845 855 4411.
Tags: First-time buyers, housing market, LIFT
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Friday, March 6th, 2009
Caesar and Howie managing partner David Borrowman is so concerned at the adverse effect of the new property sales law that he wrote to every MSP in the country. The new law, in force since 1st December means sellers must obtain a Home Report before marketing their house or face a swingeing £500 fine.
Mr Borrowman comments. “This legislation is badly thought out, provides no benefit I can see to anyone, and effectively acts like a great big tax on selling your house. For example on a flat worth around £105, 000 a seller could have to pay nearly £600 before even putting the property on the market then maybe another £180 or so to update the report when a sale is actually achieved – with much higher fees for higher value properties. To lump this extra cost on to sellers in a slow property market is simply daft in my view. ”
Mr Borrowman’s letter sparked some press, radio and TV interest, with BBC staff descending on Caesar and Howie’s offices to obtain an interview for the Scotland Today news programme.
“I’ve seen the comments the Minister for Housing and Communities made in response to my letter but I’m afraid I am totally unimpressed. Sellers hate these reports, hate having to pay for them and worse than all of that I don’t think purchasers are going to trust them either. We have done a deal with a large surveying firm to ensure that Home Reports obtained through Caesar and Howie are probably the cheapest on the market but still I think this is all an unnecessary expense.
I don’t see why Home Reports could not be voluntary – if a seller wanted to get one that’s fine, but to force them to get one at a cost of hundreds of pounds with a further fine of £500 if you don’t get one is quite ridiculous in my view. But the Minister for Housing and Communities minister doesn’t agree – he thinks it is good that sellers have to pay all this money and right for them to be fined if they can’t or won’t pay for a report. I sometimes wonder if the Scottish Government cares much about ordinary Scottish folk”
Tags: Home Reports, housing market, Sottish buyers
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Monday, September 15th, 2008
House market report
We realise how the trying times in the property market are affecting everyone in your position. It is very difficult trying to sell houses at the moment. The house market is often in the media spotlight and hardly a day goes by without some report or other making this or that prediction. Some of these reports are based on National UK data and may have limited application to the local market. I thought it might be helpful to pass on to you the considered view of our partnership on what we think is happening – and how things might develop in the future.
Current Sales
The first thing to note is that there has indeed been a big slump in the market in the Central Belt this year. Some agents and organisations are stating sales are down we understand by over 60%. Our own figures show a slump of 31% – so we seem to be doing better than many but these are still unprecedented drops. Nothing like this has been seen in Scotland before.
Number of Buyers
The reason for the slump is very clear however – it has been wholly caused by the “credit crunch” which has severely limited the ability of buyers to get mortgage funding. We have noticed no lack of willingness in the hundreds of potential buyers for whom we act to go ahead and buy – but many have been frustrated by not being able to get enough of a mortgage. Many of these buyers we believe will come back into the market when they can.
Prices Currently
If anything we think prices are certainly not going up (despite some earlier newspaper reports) and at best they are stable or trending down. ESPC is intimating their figures show a drop year on year of 6.5%. Our own records suggest that that is probably about the biggest fall we have seen.
Will prices fall badly?
The truth is we do not really know. Our feeling is that prices in the central belt will probably not fall very dramatically provided that there are no mass job losses in the region. We think that the will to buy is still there and there is pent up buying demand which has been held back by lack of mortgage availability and also by inability to sell. When buyers feel more secure and can get the money – they will come back into the market. Where there may be bigger price falls might be in particular areas where there is clearly oversupply. For example some parts of Edinburgh and Leith have a huge number of modern flats available with many fewer buyers in that sector than was expected.
Is there any positive news?
Well actually there is a lot of positive news – all of which has started to come out in the last few weeks only.
- Mortgage rates have come down to pre credit crunch levels
- Mortgage availability has dramatically improved – even 95% loans are back
- Stamp duty has been cut for house purchases up to £175,000
- Government help is available more quickly for mortgage arrears
- Further mortgage rate falls are predicted in the future
We believe all these factors coming together are going to ensure buying demand picks up again. Whether it all starts to move again quickly or gently and when exactly we see the effects, we do not know – but buyers will be back. The current market turmoil is unprecedented but people still need homes to live in. We do not believe most families would be happy to rent all their lives – and indeed rental property is quite limited in type in most areas.
What can sellers do to help?
We think there are two key issues here in this market. The first is sensible pricing in accordance with what market information tells us. The days of getting huge “over the asking” prices have gone for the moment. Be realistic and remember if you hope to trade up in the market you need only offer a realistic price also when buying. The second main thing sellers can do to help themselves is to be patient. Sales are taking a lot longer across the board and sellers have to “go with the flow” on this. The market is still operating – it is far from being completely dead – but buyers are not around in volume. But remember you only need one buyer for your house, not five or six and through time that buyer will turn up and buy the house if it suits requirements and is reasonably priced.
What’s the longer term outlook for houses?
Well so many articles are written about house prices it is easy to become obsessed by price movements. The truth is over 95% of our buying clients buy a house suitable for them and their families and not just as an investment. Also most families stay in houses for several years – which means short term house price movements don’t effect them. Even now if prices are down by a few percent many people have been in houses for a good number of years and will have the benefit of several years price increases when their sale comes through. Typically if someone bought a house a dozen or so years ago the value may have gone up by as much as 300%, so a shading of the price on sale of a few percent from last years level is not great but not disastrous either.
Our view at Caesar and Howie is that at some stage house prices must start to trend up again in Scotland for various reasons:-
- Increasing population
- Increasing immigration (in particular Polish)
- Increasing longevity
- Social change creating more family units
- Reduction in new building this year will cause a future supply shortage
- The economic cycle will move back to more growth in the future
All of these issues mean increased demand for housing over time – which must logically mean increasing prices over time. Consequently in the longer term we still see houses as a good investment. Whilst we recognise that investment issues play only a small part in families’ house buying plans – it is perhaps comforting to know that in the long term buying a house will prove to be worth it financially as well as getting your own roof over the family’s head.
If we might take a “weatherman’s” view of the market I think we’d probably be saying something like “still pretty wet and rainy but conditions will improve in time and some gentle sunshine should arrive eventually in most areas”. The difficulty we have is predicting the timing of the improvement. Some commentators say it has already started, some say it will be next spring some say even later. We just do not know – which is why for now patience and realism is perhaps the best approach.
Tags: House Prices, housing market, Market Report
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Monday, August 18th, 2008
Figures released by Lloyds TSB Scotland show that the Scottish house market is currently behaving rather differently than that of the rest of the UK.
The Scottish House Price Monitor shows in Scotland prices crept up by 1.6% in the quarter to end July. This contrasts well with figures from other UK regions which show prices falling. However Lloyds report also shows a large fall of 27% in the number of transactions completing.
“These figures mirror Caesar and Howie’s experience “said managing partner David Borrowman. “To the half year our sales were down by 22% from last year – but we have not yet found any significant slippage on prices. On the other hand “continued David “sellers have to realise that this is now a buyers’ market – unlike the sellers’ market of the last few years. Fixed prices are now becoming the norm, and sensible pricing with wide internet exposure of the property are keys to selling a house successfully. But most of all – sellers must be patient because house sales are taking longer to achieve. Buying a house is still a big ambition for most in Scotland and we feel that as the mortgage market comes gradually back to normal sales volume will steadily pick up again”
Tags: House Prices, housing market, Scotland
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Friday, August 1st, 2008
After many months of pretty depressing news in respect of house values, mortgage costs and falling sales, householders suddenly received three bits of good news in as little as 48 hours.
The first piece of news did not make many headlines – but possibly was actually the most encouraging of all. Not many homeowners will ever have had much to do with the LIBOR interest rate. This is the rate on which loans between banks are costed – and for the first time for many months this rate reduced significantly last week. This will make inter bank lending that bit cheaper and it has been the banks unwillingness to lend to each other which has been a main cause of the tightening of credit for the consumer.
Secondly and following hard on the heels of the news the LIBOR reduction – mortgage rates started to drop of the consumer. First the Halifax, then a group of lenders including the Bank of Scotland and the Newcastle Building society all announced rate cuts on a range of products. Other lenders are expected to follow suit – prompting some observers to suggest that the “credit crunch” has at least peaked and a gradual return to more normal conditions has already started.
Thirdly the National Housing Federation has just predicted a massive increase of 25% in house prices in England and Wales by 2013. The Federation bases its predictions on an increasing demand for households caused by social trends such as longevity, coupled with limited supply.
All and all this information can only encourage householders, who have been a beleaguered species recently. David Borrowman Caesar and Howie managing partner comments “We have little doubt that housing assets will go up in value over the medium term. All the data we have, increased longevity, immigration, different family groupings point to increasing demand over time for houses. Perversely the current slow down in building units will simply fuel higher price rises in the future, once the current difficult market conditions start to improve”
Tags: housing market, interest rates
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