£256m homes glut as rural sellers hold firm

MORE than £265 million worth of rural property lies unsold on the Scottish market as sellers refuse to lower their asking prices, it has been estimated.

• As sellers refuse to lower asking prices, rural property on the market is rising Picture: Getty

There has been a 10m increase in the past month in the value of rural properties on the market with an asking price of 1.5m-plus, according to research by Saint Property. More than 90 country homes, estates and farms have been on the market for an average of eight months, including eight in East Lothian at a total value of nearly 50m.

Matthew Sinclair, director of Saint Property, said country houses were currently the hardest to sell, primarily because they are often overvalued.

"There remains a significant difference between what people will pay and what the sellers will accept. Unless we see price reductions then the bottom line figure of available property will simply grow."

However there is demand for rural homes from several quarters, including Edinburgh, the south of England and the Far East. "This is encouraging as there are certainly purchasers dipping their toe back into the water, however they are doing it with caution," said Sinclair.

"They have been monitoring the market and they see plenty of property unsold or re-advertised so they are in no great rush to move."

And the number of high end properties struggling to sell could continue to rise if a housing market double-dip materialises, as looks increasingly likely. Lending figures published by the British Bankers' Association and the Council of Mortgage Lenders this week showed a further decline in activity in August, with mortgage advances slipping to a 10-year low for the month.

"We may see stock sold at the backend but there is plenty lining up to take its place," said Sinclair.

"It is difficult to say what sort of asking price reductions we need to see, but where property has seen the asking price reduced by 30 per cent or more, it has normally generated the interest to sell."

But Simon Rettie, managing director of property management and sales company Rettie & Co, disputed the downbeat picture painted by Sinclair. "The average property in that area of the market is taking longer to sell than a couple of years ago but good properties are selling in a reasonable period of time," he reported. "There has also been an increase in cash transactions happening on a private basis."

Rettie said his firm has already sold more 1m properties in September than in the rest of 2010 combined. But Sinclair believes there is an oversupply of high-end properties in the capital. He warned earlier this month that an exodus of bankers from Edinburgh to London and other financial markets would weaken the capital's housing market, causing a ripple effect from the top-down.

With an estimated two-thirds of Edinburgh homes worth 1m or more owned by bankers, a migration of top earners would add to the glut of properties for sale in the capital, said Sinclair.