Supply and demand dictating the residential market

RICS report house prices may end the year higher than they started, similarly Nationwide records increases for the last three months in average residential values, suggesting year on year continued improvement.

The summer holidays is traditionally quiet for transactions in the residential market, 2009 is proving quieter than usual with demand outstripping supply keeping prices supported.

Buyers with a sizable deposit are in a strong position with improvements in mortgage approvals.

Supply is short with a continued lack of house building and skilled construction workers now dispersed. New build projects are further hampered by lack of funding from the banks.

Good news for Edinburgh, The Financial Times has reported that the capital has done better in terms of house prices, new businesses being incorporated and city centre footfall than other regional cities.

Mortgage lending - banks caught between investors, regulators and the Government

Lending is historically low, little more than half was handed out in mortgages in the six months to June compared with the same period last year.

The fact that banks have cut their lending so severely implies their concern about the long term vulnerability of the housing sector with caution urged on reported price increases - directly contradicting the likes of RICS and Nationwide reports.

The Government is pushing banks to lend, demanding credit is pumped back into the market.

Banks watched closely by their investors and regulators are cherry picking ultra safe customers with large deposits knowing they have a buffer before negative equity hits in the scenario that house prices should fall further. Anything over 70pc loan-to-value means the cost of borrowing is overly restrictive stretching affordability in the market place.

Lenders increased the cost of borrowing on their products in July passing the increased funding costs onto the borrower by raising their fixed rates.

Commercial farmers tempted back into the market

There remains few lifestyle buyers looking for a rural retreat with decreasing demand for residential farmland reports RICS.

However the commercial sector has seen an increase with large scale commercial farmers looking to expand production.

They do this at a time of pressure on crop prices and increasing input costs but in an uncertain market is this a calculated decision based on the long term outlook with food security back on the agenda?

The harvest is underway and there are mixed reports. Commodity prices remain low.

UK Food security higher on the political agenda

DEFRA has published a report this week on the UK’s food security, raising the same concerns highlighted by The Scottish Government in July.

They recognise the UK will have to increase efficiency in production with increased yields, due to increasing population, climate change, threat of pandemic disease and volatile world markets.

This has to be done in the face of unstable input costs, a requirement to decrease carbon emissions & water usage; controlling pesticide & fertiliser use and finite agricultural land. Not to mention the arguments for protecting the environment & organic farming compounded by a population now used to a varied diet brought about by world travel.

Scotland, currently dependent on imports, aims to build capacity and skills to keep food production at the heart of farming and fund research to help meet the challenges of food security in Scotland and the rest of the world.

Game season underway

For those of you interested in the glorious twelfth today there is good news with the Game and Wildlife Conservation Trust reporting red grouse numbers up by 25% on recent years.

Those who have invested heavily in moorland management are likely to be rewarded this season.

Saint Property continues to receive enquiries about sporting estates.

Saint Property

Saint Property has seen an increase in demand from potential buyers in the last four weeks.

Many properties require a commitment from the owner in terms of up keep or responsibilities to tenants.  We ask the questions that buyers would not necessarily consider, ensuring that those purchasing are also aware of their future obligations when making their purchase decision.

Please forward this to anyone with an interest in the Scottish property market.

Contact us for advice if you are considering purchasing in Scotland.