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An improving picture for Scotland’s housing market

Recent reports are painting an increasingly positive picture of the Scottish housing market, with an increase in activity by first-time buyers and rising numbers of house sales being reported.

Many still aspire to home ownership

According to the Council of Mortgage Lenders (CML), the majority of Scottish people have not been put off by the recently depressed state of the housing market, with 78% still aspiring to be home owners within the next ten years.

The survey, which was carried out by YouGov, also found that 46% of respondents were aiming to buy a home within the next three years, and 37% of these thought that this timescale would be achievable.

In addition, the CML data revealed a 10% increase in lending to first-time buyers in Scotland in the first three months of the year, compared to the same three months last year, with a total of 4,500 loans being advanced to first-time buyers.

Levels of borrowing

The lower house prices in Scotland mean that first-time buyers here continued to borrow less relative to their income and spend a smaller proportion of their income on mortgage payments than in the UK.

First-time buyers in Scotland apparently borrowed 2.81 times their income on average and spent 17% of their income on mortgage payments, lower than the 3.23 times borrowed by first-time buyers in the UK who spent 19.5% of their income on mortgage payments.

Overall, first-time buyers typically borrowed 80% of their property’s value, which is a similar borrowing level to the rest of the UK.

Increase in activity

The Royal Insitute of Chartered Surveyers also reported some positive Scottish news, with its latest Housing Market Survey finding some encouraging signs in both activity and house prices.

According to the survey, the new buyer enquiries and newly agreed sales series remained positive for the third consecutive month for the first time since time since mid-2011. A net balance of 3% more chartered surveyors reported a rise in new buyer enquiries, and a net balance of 6% more surveyors said they had seen an increase in newly agreed sales.

Funding boost

The Scottish Government has been playing its part in helping to boost the property market by providing financial support to help people get on or move up the housing ladder.

It recently announced funding of £120 million that will be available over the next two years to both first time buyers and existing homes owners who choose to buy a new build home.

Buyers who successfully apply to use shared equity will be able to purchase a home by paying a majority share in it, while the Scottish Government pays the remaining amount under an agreement with the buyer.

“People in Scotland who should rightly be able to afford a mortgage are still facing real challenges buying a home,” commented Deputy First Minister Nicola Sturgeon, as she announced the additional funding.

“We are well aware of the challenges that people face and want to continue to do all we can to help. The £120 million funding announced today will not only help people to buy their first home, they will also help ‘second-steppers’ to be able to sell their home and to move to another property,” she added.

National Housing Trust initiative

In addition, the Scottish Government is continuing to back the National Housing Trust initiative (NHT), which allows developers and councils to jointly fund the purchase of new homes, with local authority loans to the initiative being underwritten by the Government.

Under the scheme, homes are available for rent at below market rates for five to ten years before being sold, with tenants given priority to buy at the end of the rental period.

The initiative has proved popular, providing around 1,000 affordable homes across Scotland, and a further procurement round has recently been launched.

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