News

Market Update
I would like to look at two issues this week which are having an effect on our housing. The first is Greece, the European Central Bank meets today in a continuation of the Greek saga, both sides seem reluctant to give ground, yet it seems unlikely that Greece can continue much longer in the current state of affairs. This is having an effect on all markets.
The Eurozone’s inability to resolve such a crisis largely of its own making, clearly gives Governments ammunition for the inevitable talks on reforming Europe. This looks like it will come sooner than later. The impact of the above leads me to the second issue, which is the recent Scottish Housing Report for quarter one 2015. Let’s look at some of the extracts, you can draw your own conclusions, but there is an undeniable shift in Scottish housing from purchase to rent, in times when some would argue it is considerably cheaper to buy.
The New Build graph shows a dramatic fall in new build over that last seven years, more marked in the private sector, but obvious in social rents too.
The lending for home purchase shows a dramatic shift from existing homeowners to first time buyers. This is good news in that you can’t have a productive and efficient market without first time buyers, but it illustrates the problems further up the market. Salaries have not increased, deposits have earned next to nothing and many will still find themselves in near negative equity, so an increase in size of home means a substantial increase in mortgage, which currently isn’t on offer! A huge problem for the middle market segment, (you each know where you sit)
Next look at Annual house price growth, this would normally have a correlation between new build and existing stock, yet now they appear to be at logger heads. Not sure what to make of that, other than the few buyers out there chase new when it is available then revert to old when new unavailable?
The most interesting for me is the graph showing Interest Payments as a % of our income. This is now almost half what it used to be, if ever there was a time to buy your first home or move upmarket it is surely now, coupled with low interest rates forecast Worldwide for the long term future has got to be good news.
For the cynical  I attached the graph showing Mortgage interest rates overlaid with Bank Base rates. This shows that pre 2008 when Banks were accused of making substantial profits out of lending, they now have a huge increase in the gap between the cost of borrowing and that of lending, so you have to ask the question,” why would they bother to lend anymore than they already do”
In contrast to buying, another interesting statistic is the annual rate of rental increase in Scotland has increased by 1.5% yet in the rest of the UK, the rate of increase has decreased by 1.5% . It would appear by the stamp duty increases and lack of new stock we are being encouraged to be a rental Nation!