News Review: Scotland


Broad stability in Scotland is likely in 2012 by


Martin Ellis, head of housing


economics, Halifax


the London 2012 olympic games, european championships and the Queen’s diamond Jubilee are key dates established in our 2012 diaries. unfortunately there are


few things as certain when we forecast the 2012 economy. nonetheless, it’s the time of year where we predict what the next twelve months will bring. a key indicator of our economy is the Bank of england base rate. Having been at 0.5% since march 2009, our view is that it’s still unlikely to change in 2012. a continued, low Bank rate is likely to continue to support the housing market this year. mainly as a result of such low rates, mortgage affordability in Scotland will remain strong. average


mortgage payments north of the border


SCOTTISH TOWNS ARE AFFORDABLE FOR FTBS


The majority of towns and cities across Scotland are affordable for first-time buyers, according to the latest Bank of Scotland First-Time Buyer Review. The average house price paid by a first-time buyer in Scotland in November 2011 was affordable for someone on average earnings in 77% of all local authority districts in Scotland. This compares with just 31% at the peak of the housing market in 2007. Nonetheless the number of first- time buyers continued to decline.


currently stand at 21% of average disposable earnings, compared to a peak of 38% in 2007. this is comfortably below the long-term average of 30%. Low interest rates will help to keep mortgage payments manageable for most borrowers, limiting the number of people who need to sell their homes because they’re unaffordable. this is a good sign for the market; a rise in the number of forced sales often leads to sharp falls in house prices. in terms of house price predictions, they’re not far removed from the forecast we provided 12 months ago. overall, we don’t expect to see much change this year, perhaps a small single digit percentage increase or decrease, but still lacking any real direction. in 2011, prices in Scotland performed slightly better than the uK average. For the most recently available figures (Q3 2011), house prices in Scotland suffered a smaller drop (-1.3%) over the last year than the rest of the uK (-2.3%).


“Scotland’s notably greater dependence on the public sector than many other parts of the UK may result in the Scottish housing market slightly underperforming as the fiscal


squeeze continues to have an adverse impact on public sector jobs”


showed


the housing market considerable


resilience at the end of 2011 despite a significantly weakening


and household finance conditions,


Notwithstanding better affordability, Bank of Scotland estimates there were around 17,000 first-time buyers in Scotland in 2011. This is the lowest annual total since 1976, 4% lower than in 2010 and less than half the peak of 39,100 in 2006.


Much of the fall in the number of first-time buyers in recent years can be explained by the need to put down a bigger deposit. The average first-time buyer deposit in the first eleven months of 2011 was £22,396. Whilst this was 9% (£2,120) lower than in 2010 (£24,516), it compares poorly with £12,794 in 2007. As a proportion of the purchase price, the


and financial outlook. challenging


economic economic however,


are likely to continue to bring pressure to the uK housing market in 2012, and Scotland will face the same circumstances. additionally, Scotland’s notably greater dependence on the public sector than many other parts of the uK may result in the Scottish housing market slightly underperforming that in much of the rest of the uK as the fiscal squeeze continues to have an adverse impact on public sector jobs. While the most likely scenario is that we see broad stability in the housing market this year, we must note that there is currently considerable uncertainty regarding the prospects for the economy. the path of the economy in 2012 will, to a large extent, depend on how events in the eurozone unfold. in addition, the extent to which households choose to reduce their debts will also affect growth over the medium term. as a result, the outlook for both the economy and house prices is particularly uncertain.


average deposit has increased from 10% in 2007 to 21% in 2011.


An estimated 99% of first-time buyers in Scotland were exempt from paying stamp duty in 2011 according to the data. Nearly a quarter of first-time buyers did not pay any stamp duty as a consequence of the temporary increase in the starting threshold for first-time buyers from £125,000 to £250,000. On this basis, 23% more first-time buyers - and 24% in total - will be required to pay stamp duty once this concession for those trying to getting onto the property ladder for the first time ends in March 2012.


mortgage introducer JANUARY 2012 21


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52