Bank job cuts blamed as £1m home market grinds to a halt

The 1 million-plus market, previously dominated by senior figures from Royal Bank of Scotland and HBOS relocating to Edinburgh, has ground to a halt since the financial downturn intensified in October.

Leading property firm Rettie & Co said it had yet to sell a single home above 1m this year and transaction levels towards the end of last year were nearly four times lower than the year before.

The troubles at RBS, together with the fall-out of the Lloyds TSB takeover of HBOS are expected to lead to severe job losses, particularly among head office staff.

Tony Perriam, a director at Rettie & Co, fears that will lead to previously "safe" mortgages being more risky – with high-level homeowners being forced to sell.

Mr Perriam said: "Last year, there was a big wave of sub-prime toxic debt and lending causing mayhem in America then filtering here.

"The new trend there now – which is extremely worrying – is people who are otherwise good, safe debt coming into a difficult position. Well-funded family houses become available because of executive redundancies.

"It is a completely different form of debtor. At the moment, it's people with buy-to-let properties who are in difficulty but this would be people who can't hold on to their family homes. It would be alarming but it could well happen here."

It is estimated that around 40 per cent of all properties sold for more than 1.5m in recent years have been to HBOS and RBS executives relocating to Edinburgh.

But Rettie sold only nine properties in Scotland for more than 1m in October and November 2008, compared to 33 in the same months a year earlier.

There are now fears there could be an exodus of high-fliers from Edinburgh, particularly at HBOS.

David Marshall, business analyst at the Edinburgh Solicitors Property Centre, said: "There is no question that, if we do see a high level of redundancies, it will have an impact on the number of people pressurised to sell. However, as yet, there is no evidence of these distressed sales."

SLUMP SEES TENANTS SWAP ONE-BED FLATS FOR SHARED PROPERTIES

THE economic downturn is set to lead to more people sharing rental properties rather than living alone, according to a new report.

An analysis of rental properties in Edinburgh, Glasgow and Aberdeen has shown that one-bedroom flats are now taking up to nine days longer to let than they were a year earlier.

The Citylets report for the final three months of 2008 showed that

the average time-to-let rose to 37 days, up two days from the same period in 2007, with 48 per cent of all properties letting within a month.

Thomas Ashdown, managing director of Citylets, said: "This report suggests that, with the credit crunch still going strong, people are becoming fearful for their jobs and more protective of their money – which is why many are choosing to team up and rent larger homes with friends."