AFTER a rapid increase in house prices in Glasgow and the surrounding areas last year, 2022 could prove to be a difficult year for those looking to buy their first property.
As the Glasgow Times previously reported, the latest data from Bank of Scotland revealed Glasgow saw an average house price increase of 7.1% with the average rising by £13,662 from £193,621 to £207,282.
Motherwell meanwhile saw an average house price rise of 17.3%, Hamilton saw a rise of 13.7% and Paisley saw a rise of 11.8%.
This was significantly higher than the Scottish average of 8.8%.
With prices set to continue rising this year, we spoke to three property experts about what can be expected from the market this year.
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Paul McCaughey, from Merchant City Mortgages, says 2022 has had a busy start so far and he thinks it will be a bigger year than 2021.
Paul said: “The only thing that’s slowed down over the past 12 months is stock, I think homeowners are reluctant to put their house on the market until they’ve found something else which obviously causes a bit of a demand/ supply issue.
“It means house prices will continue to stay high until competition reduces.
“The only downside I see is the availability of mortgages.
“Funds will contract as money markets contract.”
Lisa Duncan, mortgage and protection advisor at Just Mortgages agrees that unless more properties become available, it will remain a sellers’ market and the trend of properties selling for more than their home report value will continue.
Lisa said: “The main issues first-time buyers will face this year is competition from buy to let investors, normally a sector that would never pay home report value or more, however with available stock being so low we are seeing this is no longer the case, this is increasing demand for resale properties and increasing competition for first-time buyers.
She also said another issue facing the property market is new builds.
Delays caused by the pandemic and delays with materials has caused the price of new builds to increase and with low numbers available, more people are buying older properties, therefore increasing competition for first-time buyers.
Lisa added: “The longer it takes for people to find a property, the more desperate they become so each time they lose out on a property at the closing date they become more determined with the next one and increase the amount they offer which continues to make it difficult for first-time buyers with a limited deposit to compete and get offers accepted.”
Melanie Gilmour, partner at John Charcol Independent Mortgage Expertise, says the need for bigger deposits will cause difficulties for first-time buyers as they contend with the rising cost of living.
Melanie said: “Rising inflation may put pressure on their ability to save a deposit, due to the additional costs of living.
“This coupled with the lack of government support through Help to Buy schemes will continue to make the process more frustrating and stressful for first-time buyers in the year ahead.”
However, Melanie highlights there are still some options available such as lenders who will consider 5% deposits on both new-build and re-sale, unsecured loans as a way of borrowing or increasing their deposit to pay above the home report, and there is a pilot where one high street lender is agreeing to lend more depending on the energy rating of the property.
So, while the year ahead looks difficult for first-time buyers, what advice do the experts have for those still planning to get on the property ladder?
All three experts suggest potential buyers seek independent mortgage advice and get the support of a mortgage broker to give them an accurate and realistic idea of the maximum amount they will be able to borrow and as a result narrow their search.
Melanie said: “A great broker loves to negotiate on property for clients, talk through home reports, liaise with solicitors, present different ways of buying their dream home, and ultimately help them put the pieces of the puzzle together confidently.”
If you keep getting outbid at the closing date, they also recommend reassessing your needs and priorities to allow you to submit a higher offer.
Lisa said: “Expand the area you are willing to consider, or rather than a semi-detached property consider a terraced property or two-bedroom rather than three.
“By reducing the price point of the properties you are looking at it will reduce the amount of deposit you require and could free up some much-needed cash to increase your offer and have it accepted.”
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Lisa also recommends contacting the current homeowner if you find a property you love and has found this tip has worked well for some of her clients.
She said: “Write a letter or chap the seller’s door and speak to them about why you love their home and what it would mean for you personally to be able to own it as your first home.
“As again not everything boils down to who offers the most money, they may want to see a young family/couple get the property who they know will look after it and be a good fit for their neighbours.”
Paul added: “The best advice I can give to homebuyers is to pay your bills on time and save, save, save!”
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