Sales down by tenth as slump grips Scots housing

SCOTLAND'S property market slumped between April and June this year as the sale of homes dropped by more than ten per cent on the same period for 2010, new figures have revealed.

A survey by Registers of Scotland also showed an increase in average house prices of 0.4 per cent to 153,820 between April and June, compared with the equivalent three-month period last year.

Scotland's 16,947 property sales during the three months to the end of June was a fall of 10.8 per cent on the same quarter the previous year.

The number of property sales in Edinburgh plummeted by 10.4 per cent, even though the figure of 1,867 homes sold in the capital between April and June was the highest in the country.

Moray had the biggest percentage fall in property sales, at 26 per cent, while the number of homes sold in Scotland's largest city, Glasgow, fell by 15.7 per cent.

The survey also showed that the total value of Scotland's house sales fell by 10.5 per cent to more than 2.6 billion.

A leading Scottish property expert said the "market still looks very unsettled", with many people opting to rent rather than buy a home.

Neil Freshwater, of the Royal Institution of Chartered Surveyors Scotland, said: "The slight increase in house prices is encouraging for the market, but should be treated with a degree of caution as the figures also show transaction numbers have dropped.

"This means the increase may be caused by demand briefly exceeding supply as people choose not to sell or choose to rent instead.

"Therefore, while it is a move in the right direction, we would need to see continuous improvement over a sustained period before we can tell if the property market is in recovery or not."

Registers of Scotland said Edinburgh remains the largest market, with sales of more than 388 million for the quarter, although this was still down 12.8 per cent on last year.

East Ayrshire showed the highest rise in the value of sales, up 17.7 per cent on last year.

Meanwhile, the survey showed that the most expensive place to buy a home between April and June 2011 was East Renfrewshire where the average price was 221,309 - a rise of 10.9 per cent.

Edinburgh's average price was 208,333, a 2.7 per cent drop on the figures for the same period last year. In Glasgow, average house prices were 129,378, an increase of 1.3 per cent, while Dundee's was 122,342 - down by 1.9 per cent .

David Marshall, a business analyst at the Edinburgh Solicitors Property Centre, said that job insecurity and large deposits that potential buyers are expected to pay for homes helped to explain the decline in sales.He said: "The deposits issue and the job insecurity that many people are affected by, together with the cutbacks in the public sector, that have yet to take full affect, have all played a part in making people less likely and able to buy property."

The figures sparked claims from senior MSPs that lenders were not making mortgages affordable enough for prospective first-time buyers.

SNP MSP John Wilson, the deputy convenor of Holyrood's economy committee, called on the Scottish and UK governments to lobby representatives of the building industry and mortgage lenders.

"These figures indicate that the housing market is still facing major issues, individuals are understandably reluctant to enter the market due to the uncertainty of property prices," he said.

"This may be due to the reluctance of mortgage lenders to release funding and also the insecurity that many people face in their employment.

"There is a real difficulty with finance companies not making mortgages available and the high level of deposits that people are expected to pay.

"The Scottish and UK governments should enter into negotiations with mortgage lenders and housebuilders to look at how the situation can be improved, particularly in relation to first-time buyers."

Labour's finance spokesman, Richard Baker, described the overall figures as "very concerning".

He added: "Clearly there are many people in Scotland who want to get on the property ladder, but are struggling to do so because of the lack of affordable mortgages out there."

A Scottish Government spokesman said: "These are difficult times for Scotland's housing market and we sympathise with homeowners who face serious challenges in selling their properties.

"The Scottish Government is delivering real measures to help those in greatest need.

"We are investing millions to help landlords and others build affordable homes, and are also assisting people to get on to the housing ladder through initiatives such as the Low Cost Initiative for First Time Buyers (Lift) and shared equity schemes."