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Boom Done? 2007-08-15

Posted by clype in Glasgow, Money, Scotland, Statistics.
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The house-price ‘boom’ in Scotland may be coming to an end, according to a report that found property prices in two cities had fallen in the past quarter.

In the three months to 2007-07, property values in Glasgow and Aberdeen dropped by 1.2 per cent and 1.4 per cent respectively, compared with the previous quarter.

There was a 10 per cent fall in prices in south-east Scotland (excluding Edinburgh) and a 2.5 per cent drop in the south-west (excluding Glasgow), according to ‘The Lloyds TSB Scotland Scottish House Price Monitor’.

Interest-rate rises and increases in the cost of borrowing are being blamed for ‘the slowdown’.

Chief Economist for The Bank of Scotland,Mr.Martin Ellis said the market was expected to ‘cool’ towards the end of the year as interest rate rises bit. He said:

‘Monthly increases have been slowing and we expect that to continue because interest rates have caused people to think more closely about spending on property.

‘We expect that to be reflected in Scotland, where the property market has been buoyant.’

Some parts of the country, however, continue to show strong growth.

Dundee had a strong quarter, with a 9.2 per cent rise, and the cost of properties in the north of Scotland also increased (13.1 per cent) as did those in Edinburgh (2.8 per cent) and in the Central/Fife/Perth/Tayside region (10.1 per cent).

Chief Economist at Lloyds TSB Scotland Professor Donald Macrae said:

‘We witnessed a surge in house prices in the previous quarter, which goes some way to explaining the range of current quarterly results.

Although there is wide variation in price changes, there is clear evidence that the Scottish house price boom is ending.’

Lloyds TSB says Edinburgh prices increased by 15 per cent to keep the capital Scotland’s most expensive city, with an average property price of 228 087 GBP.

Mr.David Marshall of ‘The Edinburgh Solicitors Property Centre’ (ESPC) said the market in east central Scotland this year had so far exceeded projections. He said:

‘In the first two quarters of 2007, year-on-year growth in Edinburgh stood at 15.9 per cent and 13.6 per cent.’

However, he warned:

‘One would expect that in coming months this level of growth will “cool” somewhat. A large number of households will see fixed rate mortgages taken out two years ago coming to an end, so recent interest-rate rises will be more fully transmitted to the market.’

‘BUY-TO-LET’ BOOM

The ‘buy-to-let’ market has grown rapidly in the past decade and accounts for one in every ten mortgages.

The Council of Mortgage Lenders said there were now a record 938 500 of such loans, worth a collective 108 thousand million GBP.

This is more than a 50-fold increase in value since 1998, when the group first began to collect data, and there were just 29 000 of the loans worth 2 000 million GBP.

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