Offers over is over for house prices

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IT WAS the stuff of nightmares for prospective home-buyers, Just how much over the asking price will it take to get the house, 20 per cent, even 30 per cent? But now those days are over, according to Scotland on Sunday's annual Scottish house price guide.

Now experts say the English-style "offers around" system has become more prevalent and even many homes marketed at a fixed price are selling at below the asking price.

Property agents believe prices across the country are now at a more "realistic" level because of a combination of the recession and the introduction of the Scottish Government's Home Reports system.

While restrictions on mortgage lending brought a squeeze on demand and a fall in prices, Home Report valuations - now a statutory requirement - have meant that buyers are reluctant to pay over the odds.

The Edinburgh Solicitors' Property Centre (ESPC) has reported that over the past three months 75 per cent of homes on the market for a fixed price sold for less, with canny buyers negotiating prices down on properties that have proved difficult to sell.

Estate agent CKD Galbraith said prices achieved during 2010 were on average within 0.5 per cent of the asking price.

The moves represent wholesale change in the Scottish property market, which, until three years ago, saw premiums of up to 30 per cent paid by buyers of high-quality homes to get the property of their dreams.

Large premiums above the asking price were a feature of the property market across Scotland in the mid-2000s, but particularly in Edinburgh and Glasgow and the commuter towns of the Central Belt, because high-earning employees from the then booming financial sector were driving prices up.

In Edinburgh in 2006, the average premium being paid was just under 20 per cent, meaning a buyer pursuing a home on the market for 500,000 would have to offer about another 100,000 to beat off rivals.

They were also prevalent in Aberdeen because of the regular influx of well-paid oil industry executives and in some coastal areas where wealthy retirees downsizing from cities were able to outbid local buyers.

ESPC business analyst David Marshall said: "Conditions remain challenging for sellers and those that are achieving sales are generally having to show some flexibility in negotiations.

"'Offers around' and 'in the region of' are increasingly popular. I suspect we will probably not go back to premiums being paid of 25 per cent over on the 'Offers Over' properties."

Janice McIvor, the manager of estate agent Slater Hogg & Howison's Stirling branch, said: "The boom is over. Properties that were worth 900,000 in the boom are now worth 750,000.Agents need to have the guts to tell clients what their house is worth."

Peter Ryder, manager of the Tayside Solicitors Property Centre, added: "Sellers have suddenly realised that they are not going to get what their neighbours got for their property in 2006 or 2007. Houses are now selling for around the Home Report valuation."

Home Reports were brought in by the Scottish Parliament in 2008, partially to curb excesses in the housing market.