Scottish house prices fall for first time as slowdown bites
New figures out today showed the proportion of surveyors across the country reporting a fall in property price rose for the ninth month in a row.
In previous surveys by the Royal Institution of Chartered Surveyors (RICS), Scotland had been the only part of the Britain not to see falling prices, but it has now fallen into line with the rest of the UK.
The latest RICS survey showed that 95 per cent more surveyors nationwide saw house prices fall than rise in April, up from 79 per cent in March, but the study found that a tight supply of properties on the market has limited the extent of the price falls so far, with no sign of the "distress" sales seen in the 1990s house price crash.
The average number of unsold stocks of properties on surveyors' books edged down, with the ratio of completed sales compared with unsold stock falling from 25 per cent in March to 21 per cent last month.
RICS said: "The scale of house price falls remains relatively small at this stage compared to past downturns.
"The lack of new instructions to sell property continues to provide a crutch to the market.
"Large numbers of distress sales – either repossessions or sales from those attempting to avoid the repossession process – have not yet appeared in the market place and, while mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines."
According to Nationwide, the average house price in Scotland last month was 148,336, down from 151,178 in December.
The credit crunch is also continuing to make it difficult for new buyers to secure financing, with 68 per cent more surveyors noting a fall than a rise in new buyer enquiries, up from 51 per cent in January.
RICS spokesman Ian Perry said: "The real issue is the collapse in the number of housing transactions. This has very real implications, not just for the property industry but also the high street and the wider economy."
The Government was at pains to point out that the current situation was very different from the housing crisis that affected Britain in the early 1990s.
A spokesman said: "When looking at trends in the market, it is important to remember that UK house prices are 45.5 per cent higher than five years ago.
"The current issue affecting the market is fundamentally about the supply of credit – a very different situation to the early 1990s which was about high interest rates and unemployment.
"The long-term demand for housing remains high and the fundamentals of the economy are sound with low unemployment and historically low interest rates."
MINISTER WARNS OF SLIDING PROPERTY MARKET
THE Government's private fears over the dire state of the UK property market were laid bare today.
Housing Minister Caroline Flint warned the Cabinet that "at best" prices are set to fall by five per cent to ten per cent this year.
She also briefed colleagues that housebuilding was "stalling", adding starkly: "We can't know how bad it will get."
The bleak assessment emerged when Ms Flint carelessly exposed a sheet of typed notes to photographers as she entered Number 10 for the weekly Cabinet session.
The document, headed "Caroline Flint – speaking notes", had a sticker attached which said "Papers for Cabinet meeting 13 May 2008".
It pointed out that leading house price indicators were predicting reductions for the first time in recent years.