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June 4, 2008    

Scotland bucks housing market downturn

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by Gill Montia
Scotland bucks housing market downturn

The Council of Mortgage Lenders (CML) has revealed that residents of Scotland are finding it easier to secure mortgages for new house purchases than homemovers in England and Wales.

In the first three months of the year, the proportion of home loans granted for purchases increased to 11%, up from 8% in the previous quarter.

According to Kennedy Foster, the CML’s Scotland policy consultant, borrowers in the region have been less affected by the affordability issues that have been afflicting the rest of the nation.

First-time buyers in particular have been less hard hit because the average house price in Scotland equates to 4.6 times the region’s average salary, while the UK average is 5.3 times.

Prices across Scotland’s housing market are cooling but affordable mortgages mean that the market could show resilience in a prolonged downturn.

According to the Halifax, average UK house prices fell 1% in the first quarter of 2008 (compared to the previous quarter) while Scottish house prices rose by 0.2%.

The same trend was seen in the housing slump of the late 1980s.

However, property prices are still expected to fall in the region and economic forecasting consultancy, Capital Economics is predicting a 5% decline in Scottish house prices this year, compared with an average 8% drop for the whole of the UK.

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