There was a small decrease of £96, or 0.1%, in the average price paid for a house in Scotland in May, compared to April on a seasonally adjusted basis.
The latest Scottish House Price Index from LSL Property Services and Acadametrics said this is the second month in succession that there has been a minor fall in house prices, but overall this year prices are up by £2,283, or 1.6%, from December 2012.
Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments: “Scottish house prices have dipped slightly in the last two months. But compared to the beginning of the year, the outlook is distinctly sunnier. The average house is worth almost £2,300 more than in January. Prices haven’t increased as quickly north of the border, but the increases in England are being driven mostly by London.
“Sales are improving, and mortgages are more readily available. But there is still a long way to go. First-time buyer numbers are less than half of what they were before the 2008 downturn, and banks are still reluctant to lend en masse to high LTV borrowers. The finances of many borrowers simply don’t hold up to the strain of saving for a large deposit. Inflation remains high. Wage growth remains weak. Many borrowers require additional help to put enough money away for a deposit.
“When demand slows, house prices follow. Demand has been dampened by inaccessible mortgage criteria. But there are some hotspots, which have seen house prices rise, against the general trend. These areas are mortgage micro-climates, with job opportunities and better wages sustaining individual growth in their region. Aberdeen City is one such success story. Prices in Aberdeen rose 5% in the last month, to a record high of £194,202. Glasgow and Edinburgh too, have seen price surges.
“Increased first-time buyers will transform the future market. In the first quarter of 2013, loans to first-time buyers were 10% higher than this time last year. At the moment, this improvement is focused in the cities, where the majority of first-time buyers are based. As government schemes like Help to Buy and Funding for Lending continue to encourage new first-time buyers to the market by supporting their efforts to secure finance, this should grow in impact. High demand for Scottish rental property will continue to feed demand for property too.”