Home reports a salvation as market bounces

FUNDAMENTAL changes to the way in which property is sold are helping the Scottish housing market bounce back from the downturn, say industry experts.

Recent evidence from surveyors and lenders has suggested that the housing market slump has now bottomed out and although activity remains subdued, the market appears to be staging a tentative recovery.

One reason for the improvement in Scotland is a growing acceptance among sellers that they cannot expect the prices they may have achieved in a more vibrant market, believes Scott Brown, estate agency partner at Warners in Edinburgh.

"Over the past year or so, many sellers have held out for higher prices on their properties, convinced that they will still be able to achieve the sort of figures that were on offer during the peak times in late 2007," he noted. "This, combined with tighter mortgage criteria for buyers, led to stagnation in the market and property sales dwindled as a result."

Those sellers are now willing to take a lower price rather than risk having their property on the market for a prolonged period. The change is a result of last December's introduction of home reports, according to Brown. The reports, required by anyone marketing their home to the public in Scotland, are designed to provide better information about the condition, energy efficiency and value of a property before offers are made.

Their introduction prompted controversy, amid fears that they would hinder the property market in Scotland, but Brown believes that the opposite has transpired.

"Due to the fact that the home reports include a property valuation, buyers have been able to request copies prior to making an offer on a property," he explained.

"They are able to see what the valuation is and, understandably, they are unwilling to pay considerably over this price to secure a property."

Consequently, more people are now marketing their property at an "offers around" price rather than "offers over" or "fixed" price, Brown noted.

"After all, if you're valuation says that your home is worth 400,000, there is no point putting it up for sale at offers over 400,000 – as it's unlikely that a buyer will be willing to pay up to 25 per cent more to purchase it."