The Headlines


•           Confidence in the property market is much higher than it has been of late.


•           Sales picked up in December and have kept up momentum.


•           Mortgages are becoming easier and cheaper to obtain.


•           There is a great deal of borrowing activity by first-time buyers.


•           Prices are still reducing. This is expected to continue but the rate is expected to lessen. This is not a serious problem unless you bought at the top of the market.


•           There are more buyers than there were but still nothing like 2007. This explains why some properties have not sold.


•           Repossessions have stabilised.


To sum up, things are much better than they were. It is not all wonderful but a very considerable improvement.


The Detail


Confidence is what drives the housing market and there is presently bags of it!

This explains why homes, in Caithness and Sutherland, are selling much more quickly and in greater numbers than we have seen since 2008.

This is reflected by the Royal Institute of Chartered Surveyors in Scotland who report that “For the first time since mid-2011, the new buyer enquiries and newly agreed sales series remained positive for the third consecutive month.”

Statistics are, as usual, the basis of all good reporting and, of course, they tend to lag well behind the actuality. Nevertheless it is useful to report on them.

For instance, Iain Malloch, chair of the Council of Mortgage Lenders Scotland, talking about 2012, commented:

“The Scottish housing market showed positive signs of recovery in 2012, broadly following the pattern seen in the rest of the UK. The availability of mortgages at more than 90% loan-to-value has more than doubled in the last two years and lenders expect to offer more high loan-to-value mortgages this year. This, and the fact that the number of first-time buyers is at a post-crunch high, suggests that lenders really are open for business.”

My experience is that the current situation has improved beyond that. I noticed a significant uplift just before Christmas last year and this is reflected in the April Bank of England inflation report which stated: —

“Over 2012, mortgage approvals by all UK-resident mortgage lenders for house purchase were broadly flat, though had picked up in the second half of the year.”

Not that it is all good news. Prices are on the slide in Caithness and Sutherland and that is reflected by RICS Scotland who say that a slight balance of surveyors expect price reductions this year but if you are a seller, unless you boughyout at the top of the market, that will not be of much concern to you, since the house you buy will also be cheaper.

Let us start at the bottom – the first-time buyer. In 2012, the number of first-time buyers in Scotland rose to the largest annual total in four years, according to new data released by the Council of Mortgage Lenders in Scotland. A total of 19,000 first-time buyers became homeowners – a 13% increase compared to 2011.

And I repeat that this is historic data and my experience is that the market since just before Christmas has changed. There is a great deal more cheer and happiness amongst our clients and customers than there has been for some time.

This is not to say that everything that we have put on the market has sold. There are still some properties which have been on the market for a long time. The market is by no means what it was in 2007 but it is a great deal better than it has been for a long, long time.

So why is this?

Low interest rates are a big boost and, as a result of that, the Bank of England April report indicated that that: —

“The total flow of net lending ….was positive in the three months to February.” Net lending is the total lent by lenders less the amount repaid by borrowers. Confidence is high if people are borrowing at a higher rate than they are we paying their mortgages. Since the crunch, people have been cautiously paying off their mortgages. This trend seems to be have been reversed.

The Bank of England’s Funding for Lending Scheme (FLS) has undoubtedly had a part in reducing the rate of interest charged by lenders. FLS is a scheme whereby the Bank of England lends money to mortgage suppliers at cheap rates. The fall has not been as much as some expected, however, as the Bank’s inflation report indicated that mortgage rates “have not fallen as much as anticipated” but that “further falls are possible”.

Aaron Strutt of Trinity Financial mortgage brokers was reported in the Sunday Times on 19 May as saying: — “These figures suggest the banks have been failing to pass on the full benefits of the FLS to borrowers”.

Nevertheless, mortgages are cheaper than they have been for a very considerable time and so the uptake, particular by first-time buyers, is higher. Since first-time buyers were absent for a long time, this is a matter of great cheer.

The Government has a New Buy scheme which improves affordability as the government will give a deferred loan of 20% of the price, the lender will give 75% and use the borrower, 5%. This only applies if you are a first-time buyer buying a new property but I am unaware of any builder here, in Caithness, who is taking part in the scheme. Lenders are also not very keen.

One indicator of the affordability of mortgages is the level of repossessions and the Council of Mortgage Lenders report that: —

“Mortgage arrears and repossessions have stabilised at levels lower than many anticipated when the economic downturn started. Low interest rates, continuing employment, lender forbearance and tactical public policy support have combined to ensure that repossession really is a last resort.

Altogether, then, there is good cheer around and, assuming there are no more Euro shocks, it looks like it is full steam ahead for the property market in Caithness and Sutherland.

Bruce G. de Wert, Solicitor


Solicitors and Estate Agents

Wick and Thurso

+44 (0)1955 606060 (option 2)