Tuesday, July 12, 2011

Scottish housing market starts to dry up as houses and flats experience sales slow down, the housing bubble makes over priced property unsellable

Dear All

Houses and flats are vastly overpriced as the housing bubble is starting to burst.

The only way the market can cope is if there is a collapse of house prices.

I would say that the price of houses is 40% over valued because people jumped on the housing bandwagon to make a quick buck.

In Scotland, house buyers have woken up to that fact, The Royal Institution of Chartered Surveyors (RICS) said June is usually a busy time for the housing market but this year was different.

It is different because the market cannot sustain the bubble.

The number of sales has dropped in June and there were fewer buyer inquiries than any other month this year.

The market is flooded with houses and some homes are so overpriced that they cannot sell, this traps their owners.

And it puts buyers in a strong negotiating position.

Peter McEachran, of surveyor firm Graham and Sibbald for Paisley and West of Scotland, said:

"Houses which have been on the market for some time are selling, usually as a result of price reductions."

Chris Highton, of Allied Surveyors in the Scottish Borders, commented:

"After a flurry in spring, things seem to have settled back, with activity reducing again.

"Although we would expect to see a tail off towards the summer holidays, activity seems especially subdued just now."

He added:

"The top end of the market remains relatively resilient and activity there seems better, but the lower end has very little activity."

We are heading towards a massive collapse for a number of reasons, the artificial way that house prices have kept going up, the problems of mortgages, the employment situation, the freezing of wages in real terms.

It all adds up to implosion.

John Hawksworth, chief economist at PwC, said:

"We expect average UK house prices to drift down further over the next year and then enjoy only a modest recovery over the next few years.

"This reflects the dampening impact of declining real income levels and continued tight credit conditions for first-time buyers in particular."
Hawkworth is being upbeat but with employment set to rocket and public sector reform which will shed jobs, the market hasn’t fully felt the down turn.

When it hits, the effect will be unbelievable.

The PwC report said in the wider economy, London and the South East would continue to lead recovery and Scotland and other areas would lag behind.

Mr Hawksworth said:

"We see a distinct regional pattern to growth with the public spending cuts acting as a drag on recovery in Northern Ireland, Scotland, Wales and the North East in particular."

PwC has predicted that Scotland's economy will grow by 0.9% this year compared with a UK figure of 1.3%.

Next year it expects the UK economy to expand by 2.2% with the Scottish economy growing by 1.6%.

All this is nonsense unless higher wages and interest rates are restored.

At present we are seeing the collapse of countries because everything in the financial sector is geared to keep the banks afloat by selling debt and stripping national assets from countries such as Greece and Ireland.

The problem of housing is a symptom of a vastly greater picture of how the banks are managing and trading debt, controlling the money supply and forcing countries into austerity measures.

Yours sincerely

George Laird
The Campaign for Human Rights at Glasgow University


george said...

Scottish house prices peaked in 2007 and have steadily reduced in cost since then. With the 30% reduction in the strengh of sterling due to the QE of £200Bn house prices will drop by approximately 70% before they bottom out. ( 70 % for an overseas buyer and 40 to 50% for a UK buyer).
Average house prices should be about 3.5 x average earnings which is about £80K. At the moment they are averaging about £150K
A generation will never get to buy a house and I don't understand why they're so sanguine about it all.

WhatHouse.co.uk said...

Considering this post was written in 2011, at a time when the economic crisis was already well underway, I am surprised it talks about the property bubble bursting....it had already well and truly popped!

new homes in Scotland here.