Rich home in on 'bargain' houses

Published on Saturday 2 May 2009 19:38

IT'S the housing sale of the century. Well-heeled Scots are snapping up multi-million-pound homes for as much as £800,000 less than they would have been sold for a year ago.

Cash-rich buyers are taking advantage of steep drops in house prices caused by the credit crunch to purchase prime properties throughout the country at "bargain" prices.

And while the trend is bad news for sellers, it could be a sign that property prices are about to start climbing again. Experts say it is possible wealthy buyers are moving in having concluded prices have reached rock bottom.

The properties recently snapped up include:

&#149 A castle-style modern home on the Easter Belmont estate in Edinburgh which recently sold for 3.75m but, according to estate agents, would have commanded more than 4m.

&#149 A period home in the Barnton area of Edinburgh that has sold for 2.5m but would have fetched more than 3m.

&#149 A detached family home in the Bearsden area of Glasgow that was originally offered for 1.4m but sold for 1.3m.

&#149 A stone-built six-bedroom property in The Grange, Edinburgh, that was on the market for 2.5m, was reduced to 2.2m, but which would have sold for 3m.

Blair Stewart, a partner at property agency Strutt and Parker, said: "We have sold two big properties recently at prices below what they would have fetched at the peak of the market a year ago. One is the most expensive house sold in Edinburgh since the start of the credit crunch. Prices have dropped by 10%-20% even at the top of the market. More finance is now becoming available, so if you have the money then this is a good time to buy."

Stewart said a number of buyers had sold their homes and moved into rented apartments to wait for the market to fall. He added: "We have sold five properties recently to people in rented accommodation who waited for the right property to come up.

"One property went to the first viewer because he offered the guide price and was a cash buyer. Missives were concluded in a week."

A house that sold for around 1.25m was a prime example, Stewart said. "An Edinburgh financier was moving up from London and sitting in rented accommodation 500 yards away from a house when it went up for sale. He was in there very quick with a good offer."

Most buyers were Scots, Stewart added. He said: "They have had the nerve to hold on while the market fell. Also now, sellers are accepting they are getting a fair price in these market conditions. Buyers are paying market value and the days when properties could expect premiums of 30% over the guide price are gone."

Matthew Munro, a residential sector expert with Knight Frank, said the top end of the market had suffered the most from a lack of buyers due to the effects of the credit crunch.

"We sold a house in the Grange area of Edinburgh 18 months ago for 3.1m. We have just sold the same quality of home within half a mile for just 2.3m. At the height of the market we would have expected more than 3m.

"There are cash buyers and others who have sold their own properties and so are unencumbered. These people have been waiting for the time to get back into the market."

Property experts say a similar pattern is emerging across the central belt and spreading to all price bands.

Mark Hordern, marketing manager at the Glasgow Solicitors' Property Centre, said:

"The ones selling quicker are doing so because buyers believe two things. It's difficult to acquire these properties in normal marketing conditions. Either they don't come on the market at all or when they do they are very expensive."

Geoff Lockett, sales director at Rettie's in Glasgow, said cheaper finance offered by mortgage lenders was also stimulating the market. "Combined with this, prices have dropped by 15%-20%. Buyers have been holding back waiting for this drop. Now they are stepping back in."