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Residential property prices rising steadily in Scotland, data suggests

It means that year on year house price decline slowed to 1.5%, less than the fall of 1.9% recorded last month.

The situation reflects a summer bounce which has also been experienced in the more affluent regions of England and Wales, according to Peter Williams, housing market specialist and chairman of Acadametrics.

He predicts that the housing market in Scotland will finish the year around -1.5%, which allows for some minor falls in prices over the next three months.

Interest rates remaining at historically low levels, with a number of the lenders introducing competitively priced products is making homes more affordable now than has been the case for a number of years, he pointed out.

‘Also, there has been an increase in activity in the buy to let market, with lenders returning to this sector, having been absent since 2008 when the Northern Rock and Bradford & Bingley crisis came to the fore,’ he explained.

‘Countering these positive effects is continued uncertainty in the financial markets, and the high deposit levels required by the lenders, making mortgages difficult to obtain. The observed result of these different factors is that of a subdued market, with transactions at only 44% of their long term levels and house prices, although up this month, remaining relatively static over the year,’ he added.

‘Historically more people move home over the summer, and that pushes up prices. This year, that trend has lasted longer than normal, with the market making up for lost time after a turgid spring, and more buyers looking to take advantage of cheap mortgage rates introduced over the summer,’ said Richard Sexton, director of e.surv chartered surveyors.

‘But, to a very significant extent, the market is still being propped up by wealthier buyers who are being able to take advantage of exceptionally low mortgage rates. Sadly for lower income buyers, lenders have very strict criteria attached to these mortgages which means they can’t hope to get approval for them,’ he explained.

This suppressed level of activity at the lowest end of the property ladder means he expects prices at the end of the year to be lower than in 2010. ‘Credit conditions are constricted, and the malaise in the eurozone is threatening to sweep over the channel. Against this backdrop, banks are still focusing on targeting wealthier buyers with bigger deposits, which will leave lower income buyers out in the cold as winter sets in,’ said Sexton.

‘For every first time buyer, three buyers are created further up the market. Gridlock at the lowest end of the market resonates all the way up the chain, and prices won’t resuscitate to their pre-2008 levels until more first time buyers can access mortgage finance,’ he explained.

‘The market is showing commendable resilience to the economic turmoil surrounding it. The desire to own a home still ingrained into the national psyche, but the lack of availability of mortgage finance is bottling up demand. If mortgages were more widely available, we would be seeing no shortage of buyers,’ he added.