Mixed Signals in the Scottish Housing Market

Mixed Signals in the Scottish Housing Market

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Kelvingrove park area of Glasgow [credits: Sherrivokey]

The new Lloyds TSB Scotland report showed that property prices have risen in the last quarter ending July 2008. In total they went up by 1.6 per cent, which brought the average house price to £172,185.

However, despite this increase in property worth, the actual number of house purchases has dropped 27 per cent since last year.

Chief economist at Lloyds TSB Scotland, Professor Donald MacRae said: “The price boom of the last five years may well have passed into history but so far the effect of its demise is to slow the number of transactions rather than cause a drop in prices.

The Scottish housing market is demonstrating its traditional resilience in the face of an economic downturn.”

The city of Aberdeen also recorded a strong increase of 8.8 percent in the last annum, despite experiencing a quarterly fall of 2.8 per cent.

Dundee showed a second quarterly fall of 5.2 per cent, but increased by 9.4 percent in the last year.

According to a report at the end of July this year, even Scotland’s commercial sector is doing fairly well, despite a 1.5 percent fall in June. While other parts of Scotland showed equal figures in the Lloyds TSB Scotland report, the BBC seems to share a different view altogether.

Only at the beginning of this month, their report on the Scottish property market painted an all together different picture. According to their sources, the Scottish market has been one continued period of slow down.

The market is back in the 2005 region with many property owners losing a lot of money. An example is the following statement from BBC:

At Countrywide’s most recent auction, a waterfront flat in Leith sold for £152,000. It was bought for £289,000 just two years ago.

This certainly doesn’t tie in with the report by Lloyds. It seem more likely that there are conflicting messages out there.

Another indication of potential trouble is the increases of property repossessions. In 2007 they tallied around 30% all up, this year they have risen to 40-50% according to BBC’s report.

What is your experience? Are you in any way involved in the Scottish real estate market and if yes, could you tell us how this has affected you?