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Property prices in Scotland expected to level out as buyers enter the market

Prices will bottom out in the first few months of this year and then level out, predicts the ELPG group, which is made up of five firms that accounts for 25% of property sales in Edinburgh.

They are confident that banks and lenders will start offering better mortgage deals within the coming year, which will encourage more buyers into the market.

'I think we are starting to see house prices level out now, which is a positive sign for the property market. I don't believe prices in Scotland and Edinburgh in particular will continue to fall dramatically and this will encourage buyers to make a purchase,' said Les Deans, senior partner with ELPG firm Leslie Deans & Co.

'At the moment, there are still many people who are waiting for the market to fall even lower before they buy a property. They're seeing interest rates and house prices continuing to fall and they think that they will get a better deal if they hold on,' he continued.

'But the truth is that they won't get a better chance than this to get a bargain. We're already seeing property investors enter the Edinburgh market, which is a sign that we're nearing the bottom in terms of prices, so I do not believe buyers will benefit from waiting,' he added.

The ELPG also disagrees with the view of some industry commentators who have predicted that London and the South of England will be the first areas in the UK to witness a property revival.

They argue that because Scotland's system of missives means each transaction on the property chain is insulated from the next unlike the English 'subject to contract' procedure, which can lead to a series of deals all falling down at the same time, the first seeds of the UK's property revival are likely to be experienced north of the Border.

'There is a huge distinction to be drawn between the Scottish and English markets. The English market does not look like improving in the short term, house prices have been falling at a much higher rate than in Scotland and the subject to contract procedure which creates long chains of interdependent transactions means that the market there will take a long time to recover,' explained Steve Spence, senior partner of Neilsons.

'In contrast whilst we have experienced a moderate fall in house prices a look at the numbers of properties on the market would tell you that the Scottish market is all set to go. We have a record number of properties on the market and all of the owners who are proposing to move have got their mortgage agreed in principle,' he said.

'The Government has been working hard to encourage lenders to pass on interest rate cuts and improve mortgage deals for buyers in recent months. My guess is that they will use the nationalised Banks to introduce first time buyer incentivised mortgage products to help improve lending levels and stimulate the market early in 2009,' he added.