Gordon Fowlis, regional managing director of Your Move, an estate agency owned by LSL, comments: “House prices lost some of their altitude in September, but this wasn’t a simple case of the market losing thrust. The Scottish housing market was still jetlagged following the distraction of the Olympics, with the absence of buyers hitting the streets in August feeding through into a reduced number of sales in September. As fewer buyers competed for homes, reduced competition sent prices gliding down. Prices aren’t heading for a crash-landing however – we’ve already seen sales figures rebound in England and Wales, and Scotland’s likely to show a similar improvement in the last quarter of the year as buyers make up for lost ground over the summer.
“One-off factors aside, it’s clear that the housing market is still facing severe structural challenges. While the affordability of house prices have improved for the average Scottish buyer, the limited availability of mortgage finance is still a significant drag on activity, and the number of new buyers entering the market is still historically low.
“But there are reasons for optimism. The economy is growing once again, while inflation is slowing, which should help buyers’ spending power take off. On top of this, the government’s Funding for Lending is showing signs of helping the mortgage market start climbing again. While lenders’ ability to boost the number of first-time buyers to anything like pre-crunch levels is being hampered by capital adequacy requirements, any improvement in the lower tier will be felt throughout the wider housing market as chains are unlocked.
“Having said that, the national headline figure masks growing regional differences. While 22 regions have seen prices fall over the last year, 10 have bucked the trend, with Interclyde and the Orkney Islands seeing annual rises of 5.5% and 5.4% respectively. The future performance of local markets in the long-term will be closely tied to the performance of their immediate economies and labour markets. A key factor in whether these micro-markets see prices rise or fall in 2013 will be how hard they are hit by new public sector austerity measures in the New Year. There are also clear signals from the Scottish Government that they wish to ‘travel their own road’ in respect of housing policy and we are about to see an interesting ‘experiment’ as policy North of the border increasingly deviates from that in England & Wales. Time will tell which approach bears the most fruit.”
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