Nicki Douglas

Haymarket-based Purdie & Co Solicitors and Estate Agents reports that some properties are taking longer to sell and that some of the high premiums enjoyed by sellers since the start of August are beginning to tail away.

A tightening in lending practices by some banks and building societies, the collapse of the short-term letting market and the end of the First Home Fund for 2020 are among the factors driving the contraction.

While latest figures still appear to show the market is booming – Edinburgh saw a 6.2 per cent hike in average selling prices between August and October compared with average rises of 7.5 per cent and 7.8 per cent in East Lothian and West Lothian respectively – there is some early evidence that those figures may represent the top of the market, according to Purdie & Co.

“While activity is generally much higher than usual for this time of year, we are seeing some month-on-month cooling in certain activities such as viewing requests and home report downloads,” said Nicki Douglas, senior property manager.

“Properties towards the lower end of the market are still moving relatively well and the lockdown has created a greater demand for homes with outdoor space. 

“However, speaking to other estate agents, they are saying the same, that the market for flats is pretty quiet. Unless you have something noteworthy, either location or level of presentation, positioning or price, flats are staying on the market longer than they were in the summer.

“On the supply and demand scale, it’s now tipped more into a buyer’s market which is great, particularly for first time buyers.”

She added: “Most estate agents will tell you they are so busy but, after you drill down, you realise that’s because, with COVID-19 restrictions in place, viewings take an awfully long time to arrange.”

The deadline for the First Home Fund, which offers first-time buyers loans of up to £25,000 for deposits, closed on October 2 and new applicants will now have to wait until next year to take advantage of the scheme.

In addition, there has been a significant reduction in the number of high loan-to-value mortgages available.  

Ms Douglas said: “To get a 90 per cent mortgage, the number of products available are a tenth of what they were just a few weeks ago.

“It’s difficult for people to get a mortgage in the first place. Some banks are only lending to existing customers and, with some lenders, you need to wait a month to six weeks for an appointment to progress your application.”

She added: “Many investors are disappearing because of the collapse of the short-term letting market. A lot of the activity in recent years has been among people purchasing properties to let through Airbnb but, with people not able to travel, there is relatively few bookings. A lot of people looking to sell their properties because they don’t want to let them out long term.”

Earlier this year, Finance Secretary Kate Forbes raised the threshold for the Land and Buildings Transaction Tax (LBTT) to £250,000 to help boost the property market following the lifting of lockdown restrictions.

The threshold will return to £145,000 at the end of March 2021, by which time it is hoped life may start to return to something approaching normal following this week’s announcement of a vaccine roll-out potentially starting at the end of December. 

However, Purdie & Co believes the economic damage caused by the coronavirus may begin to wreak a heavier toll on the property market before then.

Ms Douglas said: “It’s anyone’s guess what will happen in the future but we may see forced sales among people who have lost their jobs or who can’t keep up mortgage payments because their income has been reduced.”