Average prices in the Highlands of Scotland only slightly down in 2011
Average residential property prices in the Highlands and Islands of Scotland fell 2% in 2011, according to the latest report from the Highland Solicitors Property Centre (HSPC).
However, a rise in prices in the second half of the year meant that the average house were only down fractionally across the year. So the average in the final quarter was £162,967, down just 0.2% on the £163,266 average for the first quarter.
The 2011 figures also reveal that the Highland and Islands property market continues to perform quite well against the national average. The HSPC final quarter average is 2.9% higher than the £158,423 Scottish average published in October by the Registers of Scotland.
While prices in the Highlands continue to hold up reasonably well, sales continue to be constrained by the same factors that are affecting the market throughout the UK.
Potential buyers are being held back by continuing uncertainty about their own financial prospects and job security. In addition, many, particularly first time buyers, are finding it very difficult to obtain mortgages.
The severity of the mortgage supply situation was underlined last month (December) in a report by the Bank of Scotland. The bank’s First Time Buyer’s Review found that the number of first time buyers in Scotland during 2011 was the lowest for 35 years at 17,121. This is down 4% on the figures for 2010. More dramatically it is less than 44% of the 39,100 first time buyers who entered the housing market in 2006.
The main reason for this decline is the size of deposit lenders now require from first time buyers. On average, they now require a deposit of 21%, more than double the 10% figure in 2007.
Against this background, it is little wonder that property sales are down across the country, says the report. The Highlands and Islands are not immune and in 2011 total sales were down 7.6% on 2010.
This is despite public confidence in the property market holding up remarkably well.
The recent Quarterly Property Tracker survey by the Building Society Association, found that 44% of buyers across the UK thought this was a good time to buy. In Scotland, buyers were even more confident pushing that figure up to 49%. Only 25% nationally disagreed.
‘With confidence in the property market remaining good, a record number of properties on the market and record enquiries, we believe there is growing pent up demand that will be turned into sales when buying conditions improve,’ said Sarah Woodcock, manager of HSPC.
‘As we have seen throughout 2011, properties sales are holding up remarkably well. But in a buyers’ market, those looking at property can afford to be choosy and inevitably this means some properties are taking longer to sell,’ she explained.
‘For those in a position to buy, this combination of a record choice of Highland properties, continuing confidence in the property market and keen prices, means this is a good time to make their move,’ she added.