Ripple Effect

[Warwickshire Lad]

http://news.bbc.co.uk/1/hi/scotland/4131972.stm

I think that this disproves the theory that Interest Rates dictate the housing market, because long after England and Wales has been static/falling, and Interest Rates spent nearly a full year at the 4.75% peak - this bubble is STILL affecting Scotland.

And why ? Surely the only reason this is happening in Scotland are that the flippers, speculators and other scum who have already wrecked the market for FTBs further south have now belatedly moved across the border to wreck the market for young Scottish people and their families too.

Scotland was largely unaffected by the last bubble in 1989, and prices have been relatively cheap compared to the rest of the UK. No more it seems.

Looks like they are getting the full nasty force of the bubble this time, though. I feel very sorry for them.

[dipstick]

Old news to those of us who have been trying to buy in Scotland WL.

Very, very, old news in fact.

It's been a nightmare.

As you probably know the Scots have an offers over system. It used to be that a general guideline was between 5-10%. You were playing with 100's rather than 1000's really.

In the last 2 years I've seen properties advertised as O/O 70k go for 128k. One 90k go for over 200k etc, etc. English people were selling "down south" properties, which have always held a higher value anyway and been putting in ridiculous offers on the Scottish ones. You couldn't touch anything with a bargepole.

Saying that it is calming now. English folk have been backing out of deals because our chain system is weakening due to the fall in prices and also there is not as many to put the offers in.

I believe Edinburgh now has over 50% of its properties on at fixed price which is not something you normally see in Scotland very often. So it looks like the bust is now travelling up country following the boom.

[dipstick]

In one word Dr - No.

Been renting for nearly 2 years from different LL's. The laws governing LL's and conditions are appalling. The "professional bodies" and I use the term "professional" in the loosest sense of the word, are either optional or funded by EA's and LL's. In short they are biased.

I have lived in some of the most appalling and dangerous conditions imaginable. i.e. my first property wasn't even earthed (in the electrical sense). My PC burst into flames. The LL wouldn't take responsibility, I had paid 6 months up front with a deposit to an agent who was an ARLA member and couldn't do diddly. When I really kicked up a stink, I was given notice to quit (2 months), to put a complaint into a professional body it takes 2 months to look at plus there is no financial recompense and they have a structured disciplinary procedure. i.e. tell the agent off.

Oh and don't bother going to see the EHO at the council either. They have no teeth. They can make LL's put the stuff right but meanwhile you still have that Notice to Quit.

If you get a good LL then that is fine. Get a bad one and you are in deep, deep, trouble.

In my current place the toilet is falling through the floor. I complained. I was given Notice to Quit.

The point in it all is what?

And please don't tell me to sue. If you are an STR then you have money in the bank. It costs a fortune to sue anybody.

[desperate housewife]

You are right warwickshire lad. I sold my house in Scotland just about 2 years ago and I got over 40% over the asking price. I was completely shocked as I expected to get about 10/15% over which has been the norm. Prices in Scotland since I left have got really out of control, but saying that I have heard as well that everything is starting to cool off. In the town I lived, the last time I was up I have never seen so many for sale signs and according to my friends and family who still live there, nothing is selling.

[dipstick]

To be honest Dr renting in the current climate is a good idea - in principle.

But the laws need tightening up big time.

To say that electrical goods need to be tested and that gas appliances need to be corgi monitored yet leave out the safety of the electrical system is a big, big, joke.

What the hell does it matter if the fridge is safe if the system that supplies it isn't?

LL's should be made to be complusory members of a regulatory body that has the ability to fine and take immediate action.

You would never get away with such a slip-shod and poorly designed legislatory in countries where renting is considered more of the norm. Plus if the laws were more stringent it would stop these silly "playing at it" BTL's jumping in and pushing up the house prices and trying to make a quick buck.

Rant over!

[brodie]

Hi Warwichsire lad, the increased prices in Scotland started around 1998 with huge increases in Edinburgh(the parliament being there had a huge effect) then the ripple extended to communter areas eg Dunbar, lothians, Stirling etc since buyers could get more for their money.

Glasgow was hit next by huge increase around 2001 then the ripple effect hit the commuter towns around Glasgow 2003 eg north lanarkshire, south lanarkshire, ayrshire with the M77 road network etc.

Ok, the prices are nothing like they are down south, but the average wage is I think around £19,000 depending on the job you do and where you work. Average wages outside Edinburgh and Glasgow of course a lot less.

It seems a lot of buyers from down south bought in Scotland and the traditional o/o system whereby a few hundred pounds would be offered turned into thousands of pounds over, and some areas in both Edinburgh and Glasgow were receiving 40% + on the offers over system.

So I just wanted to let you know that the crazy house prices have been happening in Scotland for a while now. Whether there is still room for increases remains to be seen.

I certainly know that a lot of FTBs in Scotland have been priced out of the market.

So, like down south, BTLs ruled the roost.

[schadenfreude]

The hard facts are that the ripple downwards has already started in Scotland-

ESPC and GSPC (supposedly authoritative) figures show that prices are already declining in Glasgow and Edinburgh, and in Edinburgh are well below its peak in Q3 2004.

As with south of the border, this trend will accelerate as supply continues to exceed demand. ESPC has 50% more property for sale than this time last year, and reports falling transactions.

The Scottish economy has underperformed the rest of the UK over the last few years, and there is no sign of this reversing - giving no reason for Scotland to escape a UK slump.

Scottish visitors to HPC should not fear - Scotland won't be immune from the slump in prices.

The good news?

As Scotland tends to lag behind England, those entertaining an STR may still have time to exit near the top, although I wouldn't bet on it.

[brodie]

You are right warwickshire lad.  I sold my house in Scotland just about 2 years ago and I got over 40% over the asking price.  I was completely shocked as I expected to get about 10/15% over which has been the norm.  Prices in Scotland since I left have got really out of control, but saying that I have heard as well that everything is starting to cool off.  In the town I lived, the last time I was up I have never seen so many for sale signs and according to my friends and family who still live there, nothing is selling.

<{POST_SNAPBACK}>

Yeah, according to friends and family properties are taking a lot longer to sell. Also it has been pointed out that the ESPC has over 50% properties on at fixed price. This is not unlike the English system were the property gets put on the market at an overinflated fixed price and buyers can either pay or offer under the fixed price.

Unlike the ESPC the GSPC has less fixed prices unless they are at the high fixed prices. ie over £100,000.

I guess it will all depend on how Edinburgh prices do over the coming months and the ripple effect of what happens in Edinburgh spreads out to the rest of Scotland.

Mind you, if you believe what some of the Scottish papers are saying then an increase in prices will occur. Afterall, Edinburgh and Glasgow have got a lot of catching up to do to reach the prices down South!!!

I am glad I don`t always believe what I read and do my own research.

[simon99]

I thought Scotlands population was supposed to be on the wane? How on earth can there be a property shortage unless the population is really rising?

[brodie]

I thought Scotlands population was supposed to be on the wane? How on earth can there be a property shortage unless the population is really rising?

<{POST_SNAPBACK}>

Hi Simon99, according to the Scottish Executives projection reports, population was decreasing especially in Glasgow.

However, many of the estate agents in Scotland are reporting that a lot of buyers have been from areas outside Scotland ie England and abroad. Its a question of whose reports do you believe.

Maybe as prices got to expensive down south for investers, the ripple effect extended as far as Scotland. Also, those who sold in the South a few years ago who bought in Scotland were able to offer 40%+ to buy in Scotland and may have perceived that they got a lot more for their money, ie bigger property and better quality of life.

The question for me is - IS THERE ANYWHERE LEFT FOR THE RIPPLE EFFECT TO GO IN THE UK? Any thoughts?

[New Darker Law]

I thought Scotlands population was supposed to be on the wane? How on earth can there be a property shortage unless the population is really rising?

<{POST_SNAPBACK}>

According to the Executive, Scotland's population enjoyed a modest rise in 2004. This went against projections however and is not expected to continue.

On the ripple effect: Scotland has historically always had a smaller percentage of owner occupiers than England. In recent years however, this has risen dramatically and may be a factor to consider in the HPI there.

Ironically despite their historical aversion to OO Scotland has the highest percentage of homes owned outright (no mortgage) in the UK.

I wish I could remember where I read that recently, but you'll have to trust me on that one.

The market is finally coming to a halt as far as I can see, but I would guess it's about 6 months behind the rest of the UK correction-wise.

NDL

[skye]

Well in Scotland apparently Dundee is top of the list!! I would like to know if the ESPC basis its figures on the Land registry data which from a few properties I have been tracking seems to lag the market by 5- 6 months.

I am renting in Edinburgh having sold a house in the SW Scotland last year at 30 % over O/O. However nothing is moving there anymore. Still can't really afford to buy much in Edinburgh as yet but i am hoping for a correction if not a crash. Given the number of FP and Properties being reduced - one round the corner from £399 k to £325 k (£74k) I think Edinburgh has been affected since last year and this trend is continuing. There are still a huge number of new flats popping up all over the place and that is in a City full of flats!

I really don't think much is sffordable and as for investors I see these drying up once there is no capital appreciation or some falls.

[brodie]

Well in Scotland apparently Dundee is top of the list!! I would like to know if the ESPC basis its figures on the Land registry data which from a few properties I have been tracking seems to lag the market by 5- 6 months.

I am renting in Edinburgh having sold a house in the SW Scotland last year at 30 % over O/O. However nothing is moving there anymore. Still can't really afford to buy much in Edinburgh as yet but i am hoping for a correction if not a crash. Given the number of FP and Properties being reduced - one round the corner from £399 k to £325 k (£74k) I think Edinburgh has been affected since last year and this trend is continuing. There are still a huge number of new flats popping up all over the place and that is in a City full of flats!

I really don't think much is sffordable and as for investors I see these drying up once there is no capital appreciation or some falls.

<{POST_SNAPBACK}>

Hi Skye,

Heres a wee scenario for you - one of my friends bought and lives in fife, but works in Dundee. The property in fife which was bought 3 years ago is now valued by estate agents at 45%+ over what it was bought for. Problem is my friend cannot sell because prices for all properties have gone crazy.

So unless all sellers start to sell for realistic prices (top and bottom prices)then all those with properties who want to move up cannot, because of afforability issues at the bottom.

As you probably know, if the wheel stops turning at the bottom prices which are unaffordable the stagnation sets in for all.

I read somewhere that FTBs in Scotland now prefer Fixed Prices as opposed to Offers Over. I believe this will only work if the Fixed Prices are affordable.

What are your thoughts? If you saw a Fixed Price in Edinburgh, would you put in an offer lower than the Fixed Price, like they usually do in England?

[frugalista]

I thought Scotlands population was supposed to be on the wane? How on earth can there be a property shortage unless the population is really rising?

<{POST_SNAPBACK}>

Who said there was a property shortage?

That's the whole point of a "bubble", it is not based on fundamentals like the relationship between supply and demand. There is no property shortage.

frugalista

[homeless]

i take it your friend lives in tayport or newport across the tay from dundee, my mothers house is there.

nice little towns but thats all they are, nothing realy special.

scotlands population is indeed falling or stagnant, the generation that has practically disapeared from scotland is the 30-40 year olds, Things were so bad in scotland when maggie thatcher was in government that everyone cleared out, it was truly poverty stricken then.

There was no work at all and the dole queues stretched out the doors and round the blocks on signing on day.

i left school into this, and there realy was no choice but to leave for many unless you wanted to live in poverty.

Scotland was a manufacturing country soley, glasgow alone was the shipbuilding capital of the world, High tech firms moved there and built huge factories ect, then overnight the lot disappeared, same thing happened to many northern cities that depending on the blue collar jobs, trouble was the whole of scotland the whole country depended on these jobs and the went.

As a result the population of scotland has dropped from 5.5 million to 5 million withoin the last 15 years.

thats one heck of a drop for any country.

So why the heck are house prices rising, there is absolutely no reason for it at all, the lieks of dundee had whole streets of houses empty, they had so much they even knocked down whole estates of council houses and still had to many, glasgow was the same.Basically scotland is the final victim of the housing bubble, i live in bvlackpool now and i have seen quite distictly how northern uk has been priced out of there ow homes, even to a greater extent than the south of the uk.

While houses are a bit cheaper wages in a lot of the north are basically half what they are in the south, so we have had the great money march from the south, creeping its way down the country, raising prices to a point even they find them un-affordable and carrying on.

2 years ago in blackpool every second house was being purchased by a southerner, now were near as expensive here as the sounth so there in scotland now raping that.

The only thing is after scotland and northern ireland as well there is no-where else left in the country to go and buy up everything the game is up.

even btl guys on here will admit that there is no value left to be found, the housing bubble is now affected everywhere.

[dipstick]

Hello Homeless,

I think Scotland has had addtional problems in that many have looked for second, retirement or holiday homes up there. Plus we have had the media boom in self-sufficiency and the like promoting rural life. Much the same thing has happened in Wales. So in additional to "normal" residential properties taking a huge hike the rural properties have been just a popular if not a lot more.

They are still popular and are holding their price at the minute but things have certainly slowed down to walking pace compared to what they were a year ago.

[skye]

I also know many of my friends in Edinburgh have kept their flats etc to rent when moving in to houses and have invested in BTL. Several have three or four properties funded by the increased value in their homes. I think the trend has also priced FTB out as they do not have the equity. These friends are relying on capital appreciation for their pensions in 10-20 years. The are not making any money from rental and in some cases not covering the costs. Some of these are average earners - have just used the increasing value of property at 20 % pa to fund a property investment business. Hopefully it will work for them but I can't believe it will work for everyone at the same time.

[xyz]

According to MyHousePrice.com, the average house price in St Andrews stood at just over £264K in December 2004 and in June 2005 at just over 205K, this works out as a 19% DROP in 6 months or a 38% annual decrease in prices if this continues apace - not great in a country that never has ahd and never will have a house price crash according to EAs.

(I appreciate that the relatively small amount of properties sold in the town will cause large fluctuations in the mean price but whether you look at mean or median, the trend since the end of last year is definitely down.)

There are also a lot of properties sticking on the market and if you do a nethouseprices search on ones recently sold many have gone just over (less than £5K over) to just UNDER asking - kind of blows the 30% EAs tell us we need to offer out of the window.

Cheaper house (<170K) are still selling but slowly and usually going BTL as there is a belief that you can't lose money in a small university town...

[schadenfreude]

Homeless

Government is now Scotland's biggest industry. We have the highest proportion of the population working (sic) in the public sector in Europe.

[brodie]

i take it your friend lives in tayport or newport across the tay from dundee, my mothers house is there.

nice little towns but thats all they are, nothing realy special.

scotlands population is indeed falling or stagnant, the generation that has practically disapeared from scotland is the 30-40 year olds, Things were so bad in scotland when maggie thatcher was in government that everyone cleared out, it was truly poverty stricken then.

There was no work at all and the dole queues stretched out the doors and round the blocks on signing on day.

i left school into this, and there realy was no choice but to leave for many unless you wanted to live in poverty.

Scotland was a manufacturing country soley, glasgow alone was the shipbuilding capital of the world, High tech firms moved there and built huge factories ect, then overnight the lot disappeared, same thing happened to many northern cities that depending on the blue collar jobs, trouble was the whole of scotland the whole country depended on these jobs and the went.

 

As a result the population of scotland has dropped from 5.5 million to 5 million withoin the last 15 years.

thats one heck of a drop for any country.

So why the heck are house prices rising, there is absolutely no reason for it at all, the lieks of dundee had whole streets of houses empty, they had so much they even knocked down whole estates of council houses and still had to many, glasgow was the same.Basically scotland is the final victim of the housing bubble, i live in bvlackpool now and i have seen quite distictly how northern uk has been priced out of there ow homes, even to a greater extent than the south of the uk.

While houses are a bit cheaper wages in a lot of the north are basically half what they are in the south, so we have had the great money march from the south, creeping its way down the country, raising prices to a point even they find them un-affordable and carrying on.

2 years ago in blackpool every second house was being purchased by a southerner, now were near as expensive here as the sounth so there in scotland now raping that.

The only thing is after scotland and northern ireland as well there is no-where else left in the country to go and buy up everything the game is up.

even btl guys on here will admit that there is no value left to be found, the housing bubble is now affected everywhere.

<{POST_SNAPBACK}>

Hi Homeless

Yep, like you I reckon the game is up. Property investment is so last year. I believe the stockmarket is performing better. So the RIPPLE EFFECT has hit England,Wales, Ireland and Scotland and there is nowhere else to go.

All you have to do is check Nethouseprices to see for example how some prices in Scotland have increased by over 100% in just two years.

I reckon the only way is downward now.

Thanks, being from Glasgow myself, I agree with your analysis. Hopefully it will be of interest to those who read this forum.

And yes, Newport and Tayport is nice.