Property hits plateau with market ‘down but not out’

Published on Thursday 23 February 2012 12:50

THE Scottish housing market has “plateaued” and shows no sign of “vigorous recovery”, according to a new report.

The quarterly price index for properties rose by 1.4 per cent between November and January, the Scottish House Price Monitor from Lloyds TSB Scotland found.

But over the year property values still fell 4.2 per cent, making the average price of a home £155,528.

Donald MacRae, chief economist at the bank, said the housing market had also been hit by a further fall in consumer confidence.

He said the market had adjusted to the economic downturn with a halving of sales and “volatile price movement”.

Mr MacRae said: “Average house prices are now 91 per cent of their peak of three and a half years ago. Consumer confidence fell further during the last quarter of last year due to a high level of retail price inflation in excess of increases in earnings, squeezing disposable income.

“The Scottish housing market appears to have plateaued in both sales numbers and price movements. There is no sign of a vigorous recovery in the Scottish housing market, but equally no sign of a further precipitous fall in house sales or house prices.

“The Scottish housing market remains down but not out.”

The report said that Edinburgh saw the biggest fall in average house prices in January 2012, compared with the same month last year, falling 10.8 per cent to £188,892.

Glasgow also suffered a steep fall, down by 9.6 per cent, to an average price of £155,435.

Dundee was the only area to record a rise, up 7.8 per cent to £129,445.

Mark Hordern, of the Glasgow Solicitors Property Centre (GSPC), agreed with the report’s findings that the market had plateaued, but only in the sense that it had “bottomed out”.

“In terms of price, we now expect significant recovery and at the same time a very gradual recovery in activity into March this year, that will accelerate into next year,” he said.

“We do not think that things are going to get worse. We agree with Lloyds that the market has plateaued, but only if, when it says that, it means ‘bottomed out’.”

The last price monitor report had indicated that Edinburgh, Aberdeen and the North of Scotland had shown growth, but Mr MacRae said at the time that there was still a “flat overall economic outlook”.

Mr Hordern questioned the accuracy of the Lloyds TSB reports because of the method that was used to calculate their figures. He said the practice of incorporating prices from earlier in the property cycle had the effect of smoothing out the impact of significant short-term changes, giving what he believed was an inaccurate picture of the current property market.

He added that while January and February were traditionally quiet times of the year for house sales, the market was already beginning to see a return of confidence among buyers.

He said: “Though it’s just the last six weeks, we have seen sales markedly higher than they were last year.

“There has been a definite change in buyer attitudes.”

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Ron Greer

Thursday, February 23, 2012 at 09:17 AM

2 I can understand your core thinking, but it is unfortunate that youy have framed it in terms of a 3 letter word for bad----tax. Calling the concept a 'land tax' has held it back for 100 years. The 100% collection of land RENT value would replace taxes in income( which are just state robbery) thus stimulating economic activity. Collecting LRV for public revenue means that we don't even waste money on chasing up tax dodgers as land cannot be hidden, transferred to an offshore account or smuggled out in a briefcase. Even non -resident squillionaire oligarchs would not be able to avoid, whatever the skills of their current tax avoidance consultants. With 60% of Scotland being owned by around just 2000 private owners and the most tightly documented pattern of tenure, we don't even have a huge assessment job.

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Ron Greer

Thursday, February 23, 2012 at 09:05 AM

1 The bricks and mortar are not the volatile element. The core issue is the societally created Land Rental values( land has NO capital value) on which the bricks and mortar stand. The volatility will remain until there is a 100% collection of this LRV to replace all major direct taxes on income, bricks and mortar per se, and entrepreneurial enterprise. We lose the volatility and the recession at the same time.

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Hector the Lessor

Thursday, February 23, 2012 at 07:33 AM

Not a lot wrong with bricks and mortar Charles. What is wrong is the cost of new housing. An extremely large tax on land developments may be the way to go. Either way if you accept that three and a half times one individual's income should provide a three bedroom home for a young family, I am talking about 35000 a year, could be acceptable. What you have to worry about are those folk who are earning less than 25000 a year and are not capable of entering basic level housing. I keep on repeating the achievements of Margaret Thatcher who realised this problem and introduced the facility to buy their own rented houses. One or two posters have mentioned that it introduced a scene where the tenant bought the house, rented it out and went on his merry way to achieve more property. This would never have succeeded if the individual political parties concerned realised that it was for the benefit of all and not to provide brownie points for the next generation of council wannabees. A totally disgusting result to a Christian attempt to solve a serious and growing problem.

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Charles Linskaill

Thursday, February 23, 2012 at 01:48 AM

Deluded Faith in the Property Market, How Sad so much emphasis is still placed on 'bricks and mortar',, Many Never Learn!

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