Pace of recovery in the Scottish property market lagging behind that of the UK, figures suggest

Property lending in Scotland mirrored the rest of the UK by falling 33% in the first three months of 2010, according to new data released by the Council of Mortgage Lenders.

There were 9,700 loans to homebuyers worth £1.1 billion, down from 14,400 worth £1.6 billion in the last three months of 2009 which closely echoed the movement in the UK more widely.
 
The fall largely reflects the fact that many buyers who would have normally bought in the early months of 2010 brought forward their purchases to take advantage of the stamp duty holiday on properties valued at under £175,000 before it ended in December last year, said the CML.
 
Even with this effect, the number of Scottish homebuyer loans in the first quarter of 2010 was up 28% by volume, 36% by value, on the low of 7,600 worth £784 million seen in the first quarter of 2009.
 
Scotland’s share of UK house purchase loans was back up to 9% in the first three months of 2010, following a small dip to 8% in the previous quarter, the figures also show.
 
There were 3,900 loans to first time buyers worth £326 million in the first quarter of 2010, a 28% decline in numbers on the last three months of 2009 but a 39% increase on the trough seen a year previous.
 
But first time buyers accounted for 40% of all property purchases in Scotland in the first three months of 2010, 2% more than during the last three months of 2009 and 2% more than the UK average.
 
First time buyers in Scotland put down on average a 23% deposit in the first three months of 2010. This is the first time average deposits for this group have been below 25% since the end of 2008 and is evidence of some modest easing of affordability criteria for Scottish first time buyers, the CML said.
   
Home movers in Scotland put down on average a 30% deposit, unchanged from the last quarter of 2009 and 1% more than the same quarter last year. They typically needed to commit only 9.5% of their income to cover the interest payments on their mortgage, down from 10% in the last quarter of 2009. This shows that for those who are able to put down a significant deposit, affordability is at a 14 year high.
 
The first quarter of 2010 saw another drop in loans for remortgage at 7,000 in the first quarter of 2010 worth £700 million, down 22% from the last quarter of 2009 and down 36% year on year.
 
‘The pace of recovery in Scotland at first sight appears slower than in the rest of the UK, but in fact throughout the current housing cycle, market activity in Scotland has followed that of the whole of the UK very closely, but with a lag of around one quarter,’ said CML Scotland policy consultant Kennedy Foster.
 
‘As in the rest of the UK though, the low level of house sales seen in the first three months of 2010 can be attributed to two events. The end of the last stamp duty holiday in December 2009 will have caused a drop in house sales at the start of the year and the severe winter weather seen in Scotland in January and February will have adversely impacted on the market,’ he added.