House price slump 'until 2013'

Published on Saturday 21 March 2009 12:57

HOUSE prices in Scotland will not start rising again until 2013, according to a report from property giant DTZ, sparking fears over increased homelessness.

As the recession continues to exceed even the gloomiest economic predictions, DTZ has warned that the Scottish housing market will endure a deep and prolonged slump for at least another four years.

However, if the recession worsens, the property group suggests that Scottish homeowners may not see their house prices recover until 2017.

Although Scotland is still expected to fare better than the rest of the UK, the report paints a gloomy picture for the immediate future of the property market north of the border. "Looking back at previous Scotland figures, the deep and prolonged scenario is the more likely one," said Maria Johansson of DTZ in Edinburgh.

The report has raised fears over the number of Scots who will be forced out onto the streets if they lose their jobs or have their home repossessed. Housing associations report a near doubling in demand for social rented accommodation.

In Edinburgh, for example, it is estimated that there are currently around 300 applicants for each social property for rent, up from 170 last year.

Craig Sanderson, chief executive of social housing group Link, said: "There is possibly going to be more homelessness as a result of this. We have people coming through our doors saying 'We have lost our house and have nowhere to live'."

Sanderson repeated calls for the Government to subsidise more social rented accommodation in Scotland. He also pressed banks to resume lending to housing associations, which want to provide work for the beleaguered construction sector.

But Ali Afshar, director of the high-end property developer AMA, said there is still demand in the market, particularly in cities such as Edinburgh, but potential homebuyers lack confidence at the moment. "People still need somewhere to live," he said. "Property is a long-term investment."