House Prices in Edinburgh

[Rab]

There are a lot of opinions on this thread, some espoused as facts, but little if no evidence provided to show that property is a poor investment in Edinburgh.

 

The link Dave provided above shows a 9.3% increase in house prices in the last year. 9.3% in the current climate is a sound return. Not saying you couldn't have got better, but it's not bad at all.

 

And that's only for the last year. Previous years were higher, if you bought a property 3 years ago, you're looking at about a 20% increase in value in most areas.

 

Bottom line. Overspend on a mortgage and you could end up in big trouble. But that's always been the case. Buy what you can afford, if you're living there treat it as a house first and an investment second and you'll end up quids in in the end.

[Geoff Kilpatrick]

People should be careful about using an annualised return as an indicator of a prevailing trend. The volatility within the last 12 months should be looked at.

[Rab]

People should be careful about using an annualised return as an indicator of a prevailing trend. The volatility within the last 12 months should be looked at.

 

Well said Geoff, a property investment depends on what you expect from the long term. If you're trying to flip a house in 6 months, you're going to get stung by the current market trend, or you may get lucky during a boom time.

 

However, long term investment is measured by its return over many years, and there is every indication that sensible investment in the Edinburgh property market now (or preferably early next year if you can wait) will turn out to be prudent in the long term.

[Coco]

Well said Geoff, a property investment depends on what you expect from the long term. If you're trying to flip a house in 6 months, you're going to get stung by the current market trend, or you may get lucky during a boom time.

 

However, long term investment is measured by its return over many years, and there is every indication that sensible investment in the Edinburgh property market now (or preferably early next year if you can wait) will turn out to be prudent in the long term.

 

It is possible that future returns on property investments will look nothing like past returns. It is possible that there might be 20 years of falls in prices. There might be hundreds of years of no moves in prices. It is possible that Sterling falls in value by so much that house prices look like they are going up like a rocket when the value of those houses doesn't move.

 

As for the long term ... it makes a big difference to your returns when you get in and when you get out of your investment.

 

I recommend 'Fooled By Randomness' by Nassim Nicholas Taleb. Gives a good insight into how people extrapolate past patterns they have experienced into their views on future returns. In the UK a very small proportion of house owners or buyers have any experience of prices falling.

[Walter Kidd]

There are a lot of opinions on this thread, some espoused as facts, but little if no evidence provided to show that property is a poor investment in Edinburgh.

 

The link Dave provided above shows a 9.3% increase in house prices in the last year. 9.3% in the current climate is a sound return. Not saying you couldn't have got better, but it's not bad at all.

 

And that's only for the last year. Previous years were higher, if you bought a property 3 years ago, you're looking at about a 20% increase in value in most areas.

 

Bottom line. Overspend on a mortgage and you could end up in big trouble. But that's always been the case. Buy what you can afford, if you're living there treat it as a house first and an investment second and you'll end up quids in in the end.

 

 

Hallelujah. A man who speaks sense who doesn't spend his whole day on google looking for bad news that doesn't exist.

[Munch]

So anyone care to cast any light on this prices up 7% over the past year story ?

 

The only 2 things that were released today that I know of were the RICS report and the DCLG report.

 

As for the second that is so far behind the times it makes the Hobos look modern....

 

They are still saying house prices in England are rising FFS !!!

 

It is obvious there are at least 2 posters on this thread who work in the property industry. How about with your knowledge you tell us what you think of Edinburgh prices rising by 7% over the last year. Perhaps over the last year up until last Autumn I would agree. After that it has been dead. Those that have sold have generally had to lower their expectations. I think we can all agree on that.

 

As for the RICS report that is quite interesting. If anyone would like a bit of real analysis see below. If however you want to know what I had for my tea it was Chilli. You don't need to read on any further. You won't understand.....

 

 

RICS report from Jan:

 

http://www.rics.org/NR/rdonlyres/06197498-AAD8-4789-B8BB-D7164C32971E/0/RICSHousingMarketSurveyJan2008.pdf

 

RICS report from Jul:

 

http://www.rics.org/NR/rdonlyres/2EC66219-821F-470A-800A-AB8437F0128E/0/RICSHousingMarketSurveyJuly2008.pdf

 

I have been having a look at when sentiment has changed across the country - That is when the number of surveyors reporting a fall in prices overtook those reporting a rise.

 

If you look at England and Wales(Jan Report) it happened across the board between June and October 2007. Lets take the middle point of August for simplicity.

 

In Scotland (Apart from a blip in Dec) it seems to have happened pretty conclusively in May 2008.

 

So by this survey Scotland seems to be lagging behind England by about

 

Halifax & Nationwide house price surveys went negative for the Uk as a whole in April and May 2008. If this follows the same pattern as the RICS sentiment then we should see Scotland go YOY negative in About Jan or Feb next year.

 

Actually - I have just had a look and HBOS are already reporting falls across Scotland as a whole !! Confusing figures out there.

 

http://www.hbosplc.com/economy/QuarterlyRegionalComments.asp

 

Strange - never saw this splattered across the Scotsman at the time....

 

Oh and Jambosrbarry I think you should think a little more about your predictions. You have gone from predicting the biggest and fastest housing crash in history to 'all back to normal' in the space of half a day..... This sort of thing needs a little more thought than that.

 

I get your drift, however the latest data highlighted on this thread clearly shows prices rising, add too that the news that interest rates are being lowered by the Banks, and data from surveyors that transaction levels have increased, i have reviewed my predictions.

 

I now would confidently say the worst is over, the market has now bottomed out and will pick up over the course off the next 8 months.

 

100k is the price that a 1 bed flat is snapped up in Gorgie, as you pointed out, this however is back too the level you were buying in that area 2 years ago, 5 years ago you could buy there for 75k or there and there abouts.

 

The crunch has reversed average house prices too the level you could buy around 2 years ago , so its fair too say most have slipped back around 20% in value.

 

It probably will take 2 years too get back too the level we were at in July 07, where prices peaked. ( Pre Crunch).

[flecktimus]

[/b]

 

I get your drift, however the latest data highlighted on this thread clearly shows prices rising, add too that the news that interest rates are being lowered by the Banks, and data from surveyors that transaction levels have increased, i have reviewed my predictions.

 

I now would confidently say the worst is over, the market has now bottomed out and will pick up over the course off the next 8 months.

 

100k is the price that a 1 bed flat is snapped up in Gorgie, as you pointed out, this however is back too the level you were buying in that area 2 years ago, 5 years ago you could buy there for 75k or there and there abouts.

 

The crunch has reversed average house prices too the level you could buy around 2 years ago , so its fair too say most have slipped back around 20% in value.

 

It probably will take 2 years too get back too the level we were at in July 07, where prices peaked. ( Pre Crunch).

 

Most of what you are saying makes sense but i think CC has a point about the Scottish market being behind the English market.

 

We are really feeling the pain down here. There are no buyers in the market place and therefore prices are dropping.

 

By your own admission sales have dramatically fallen in Edinburgh so this can only lead to distress selling at some point. We are already experiencing this down south but i don?t think you have quite reached that point yet.

 

Like CC I have been watching a certain area in Edinburgh very closely for the last 4 months and none of the properties I have been watching have sold and almost all gone to fixed price. These people are going to have to make a decision very soon and this is when you may catch up with us down south and distress selling may take place.

[coppercrutch]

Most of what you are saying makes sense but i think CC has a point about the Scottish market being behind the English market.

 

We are really feeling the pain down here. There are no buyers in the market place and therefore prices are dropping.

 

By your own admission sales have dramatically fallen in Edinburgh so this can only lead to distress selling at some point. We are already experiencing this down south but i don’t think you have quite reached that point yet.

 

Like CC I have been watching a certain area in Edinburgh very closely for the last 4 months and none of the properties I have been watching have sold and almost all gone to fixed price. These people are going to have to make a decision very soon and this is when you may catch up with us down south and distress selling may take place.

 

Indeed. I think people need to understand what these figures are.

 

Average figures of sold properties.

 

For all of you who believe these figures have any view of reality:

 

You see those streets in Edinburgh fillled with for sale signs ?

You see those houses that have been sitting there for 6 months with zero interest ?

 

These properties will not be included in ANY sort of house price report. BECAUSE THEIR OWNERS CANT SELL THEM !!

 

The only houses that are selling in any great number are the "money is no problem" sector. Funnily enough most of those properties come into the highest brackets. These properties will be included in average price calculations. Now what is that going to do to these 'average' prices…

 

I actually think this story will be bad news for estate agents. They rely on commision and this will lessen sales even more by vendors digging their heels in for "what they want".

 

I am sure the news that Edinburgh house prices have risen over the last year will cheer up all those EA's who have lost their jobs and all those people whose houses have not had a viewing for months on end.

 

Sure they are delighted with this news. Not.

 

It will simply extend the denial stage and make the crash even more extreme. Oh well.

[flecktimus]

Indeed. I think people need to understand what these figures are.

 

Average figures of sold properties.

 

For all of you who believe these figures have any view of reality:

 

You see those streets in Edinburgh fillled with for sale signs ?

You see those houses that have been sitting there for 6 months with zero interest ?

 

These properties will not be included in ANY sort of house price report. BECAUSE THEIR OWNERS CANT SELL THEM !!

 

The only houses that are selling in any great number are the "money is no problem" sector. Funnily enough most of those properties come into the highest brackets. These properties will be included in average price calculations. Now what is that going to do to these 'average' prices?

 

I actually think this story will be bad news for estate agents. They rely on commision and this will lessen sales even more by vendors digging their heels in for "what they want".

 

I am sure the news that Edinburgh house prices have risen over the last year will cheer up all those EA's who have lost their jobs and all those people whose houses have not had a viewing for months on end.

 

Sure they are delighted with this news. Not.

 

It will simply extend the denial stage and make the crash even more extreme. Oh well.

 

Talking about viewings- I was up at the weekend to watch the mighty jambos and went to view a property that I was thinking about buying.

 

Couldn?t believe it, whilst I was there 4 different groups of people viewed the same property and it?s been on the market for at least 5 mths.

 

I have had my house on the market for 3 months and had 2 viewings

[coppercrutch]

Talking about viewings- I was up at the weekend to watch the mighty jambos and went to view a property that I was thinking about buying.

 

Couldn?t believe it, whilst I was there 4 different groups of people viewed the same property and it?s been on the market for at least 5 mths.

 

I have had my house on the market for 3 months and had 2 viewings

 

Aye seems to be alot of window shopping going on. It seems the only way to shift your property (Unless you get very lucky) is to drop the price a good whack.

 

Interesting take on these new figures today in the Evening News. Remmeber this paper has been a serious property ramper for a good while.

 

They take a distinctly negative approach to the figures today...

 

Shock ****ing horror !!

 

http://edinburghnews.scotsman.com/topstories/Average-cost-of-Capital-home.4384751.jp#3116113

 

Un-announced reports from the ESPC. Solicitors and the ESPC giving figures of just how bad it is. Quotes like this:

 

"The last time it was this bad was before my time. I started in the early 1990s and I imagine that, in Edinburgh, probably the last time it was as bad as this was before that,"

 

"The number of properties on the market this time last year was just over 4000 ? now we're looking at 6300."

 

"Also, 60 per cent of properties offered at a fixed price went for below the asking price"

 

"It turned out to be a really stupid idea because the property market collapsed."

 

"The house was initially on sale for offers over ?99,000, with Mr Stoane hoping to receive ?135,000.

 

He dropped the price first to ?125,000 fixed price and is now asking ?115,000 fixed price"

 

Realism from the Scotsman !! Whatever next...

 

It seems what I said earlier could be spot on ?

 

I actually think [u']this story will be bad news for estate agents. They rely on commision and this will lessen sales even more by vendors digging their heels in for "what they want".[/u]

 

The change in attitude from the ESPC recently is quite startling. I reckon they know the game is up.

 

So what are your plans Flecktimus ? Just slash your price and get rid !!

 

I know it is easy for me to say but you can move yourself form the position of desperate to the position of power in one fell swoop. Rent a place up here for a year and spend the time putting in low offers for places you like. I get a feeling you would do very well.

 

Lots of desperate people in Edinburgh just know. I personally know of about 4 or 5. Most still hanging on for what they want.

 

Only one sold yet. They are the only ones that actually took my advice and dropped their price by a serious whack - sold within 6 days.

 

That after being on the market for almost a year at 25k below 4 seperate valuations, and with a max of 12 viewings in the entire year

 

Money talks. As soon as the general public wake up to this it really will be carnage. Get out while you can. If you leave it too long you're "10% off" will become the norm. Don't want to be chasing the market down.

 

What you reckon of the plan ?

[Guest S.U.S.S.]

Now, now... i think 'CC' has earned the right to be known by his preferred nickname of 'The Economist'.

 

I know a number of alternative nicknames, none of which are fit for a family board.

[Sherlock]

...I personally know of about 4 or 5. Most still hanging on for what they want.

 

Only one sold yet. They are the only ones that actually took my advice and dropped their price by a serious whack - sold within 6 days.

 

That after being on the market for almost a year at 25k below 4 seperate valuations, and with a max of 12 viewings in the entire year...

 

You know of a property that was on the market this time last year for ?25K under four seperate valuations?

 

Where was this property? Edinburgh? What was the o/o price?

 

The market, specifically the Edinburgh market, was booming this time last year so i'd be very interested in knowing where this anomalous property was.

[Sherlock]

I know a number of alternative nicknames, none of which are fit for a family board.

 

[Geoff Kilpatrick]

What hasn't happened yet in Edinburgh is any major increase in unemployment. If that happens, the people living on baked beans to keep a roof over their heads are totally goosed.

[coppercrutch]

You know of a property that was on the market this time last year for ?25K under four seperate valuations?

 

Where was this property? Edinburgh? What was the o/o price?

 

The market, specifically the Edinburgh market, was booming this time last year so i'd be very interested in knowing where this anomalous property was.

 

I know that certain places in Edinburgh were 'booming' this time last year. However I know of a few people selling at that time that saw anything but a boom.

 

This particular phouse was in Barnton. Not exactly a **** area either.

 

The valuations were way off. I did a bit of research myself on similar properties in the same area. The chances of selling at that price, even in a boom time, was pretty slim. Thing is 3 more valuations earlier this year gave the same value !! Fits in pretty well with the RICS survery actually. Looks like valuations only really stared coming down after April.

 

These things are so delayed though that by the time the figures tell you prices are dropping it's been going on for probably close to a year already !!

 

Anyway you clearly work in the property business ? Is what I said about reports like this actually being bad news for solicitors and Estate agents ?

 

Just how long can many of them survive with minimal commision coming in ?

[Sherlock]

...Is what I said about reports like this actually being bad news for solicitors and Estate agents ?

 

Just how long can many of them survive with minimal commision coming in ?

 

Depends on the individual firms circumstances.

 

If the solicitors firms are one or two man shops solely concerned with residential conveyancing & E/A then, depending on how prudent they've been, they may be in a position to ride out any storm.

 

If the residential conveyancing side is only one part of a larger firm then again they should be able to ride out any storm by offsetting any loss of revenue against other arms of the firm.

 

If it is a bucket-shop firm that hired young lassies, gave them minimal training and a checklist, called them 'paralegals' and let them deal with conveyancing then they'll see many redundancies although none of the managing solicitors / partners of these firms will lose jobs/money/sleep. These firms deserve to under for their sheer greed and crap service.

 

Everything really depends on how long the credit crunch lasts for and how the global/British/Scottish economy reacts to the efforts being made currently.

[coppercrutch]

Depends on the individual firms circumstances.

 

If the solicitors firms are one or two man shops solely concerned with residential conveyancing & E/A then, depending on how prudent they've been, they may be in a position to ride out any storm.

 

If the residential conveyancing side is only one part of a larger firm then again they should be able to ride out any storm by offsetting any loss of revenue against other arms of the firm.

 

If it is a bucket-shop firm that hired young lassies, gave them minimal training and a checklist, called them 'paralegals' and let them deal with conveyancing then they'll see many redundancies although none of the managing solicitors / partners of these firms will lose jobs/money/sleep. These firms deserve to under for their sheer greed and crap service.

 

Everything really depends on how long the credit crunch lasts for and how the global/British/Scottish economy reacts to the efforts being made currently.

 

Cheers for that. I especially agree with the bit in bold.

 

I have been on a few other forums's for ages now. A few were saying that when this all starts off the Estate Agents will be in denial/still go for stupid prices etc..

 

However they reckon once it starts to kick in the EA's will be the first to push prices down. They need the commision and a sale is a sale no matter what the price. Apparently there are EA's in England who are only taking on vendors who will be realistic about prices. They see no point marketing someone's house and putting the effort in if the price they want is not realistic. I can see the logic in that.

[Sherlock]

Cheers for that. I especially agree with the bit in bold.

 

I have been on a few other forums's for ages now. A few were saying that when this all starts off the Estate Agents will be in denial/still go for stupid prices etc..

 

However they reckon once it starts to kick in the EA's will be the first to push prices down. They need the commision and a sale is a sale no matter what the price. Apparently there are EA's in England who are only taking on vendors who will be realistic about prices. They see no point marketing someone's house and putting the effort in if the price they want is not realistic. I can see the logic in that.

 

You've got to remember that Edinburgh doesn't operate the same traditional estate agents = house sale way as the rest of the UK.

 

The percentage of house sales going through EA hands in Edinburgh is very small compared to the overall sales.

 

Most EA's in Edinburgh are a small department (one or two people) of a larger firm of solicitors. Thus means that commission from sales is not the only means of income these companies rely on.

[Munch]

Okay, i have been out all day so there is a lot too discuss, Copper has touched on a very interesting point, which to be honest i never thought off.

 

The figures out today showing an average increase of 7% for the year, represent actual sales, which volumes are down around 50% on same time last year, with numbers down and most off these sales being top end off the market the figures do not represent what is actually happening.

 

Copper rightly says there are 6300 houses for sale in Edinburgh and hardly any buyers, the ones that are not selling despite cuts off around 20% show that either there is no one there too buy, or clever buyers are stocking the properties they are after and biding there time till the vendors cut prices even more.

 

IMO Prices are down 20% at the moment across the board ( top end excluded 750k + )

 

As the year goes on, and going into early next year id guess we have another drop in store how much I'm not sure, best guess a further 10 to 20 percent on where we are now.

 

If the guy in the news is a barometer he started at 135, down too 125, now 115, and not a bite, by next Feb you'd think he would be down too 100, and a cheeky bid off 95, might just get it then as the guy will be SO fed up.

 

As for Estate agents Solicitors feeling the pinch, i think i can reveal the facts off what is actually going on now, Warner's shed 18 staff recently, and have now confirmed the ones that are left will be on a 2.5 day week as off September, Balfour Manson culled 30ish, Nielson's on a 4 day week, Somerville Russel are closing an Edin Based office, D.M HALL Surveyors culled 30, Graham and Sibbald 50,Northern Rock shedding 500, HBOS Closing its commercial banking division 300 gone. more news is coming through on a daily basis but you get the drift.

 

The Estate agents who rely solely on sales, IE Your Move, Re-max, Century 21,Mov8, i cannot get any info on what they are up too, all inquiries come back with words like we are bucking the trend, record sales etc etc, yet from studying there web sites its obvious not a carrot is selling, i suspect its Bravado, and id expect the walls will crumble shortly, as these guys actually pay a fee too wear the badge each month, with next too no sales only a fool would continue fighting a lost cause (mixu).

 

Latest figures show unemployment rising, inflation rising,mortgage rates not going too fall soon, deposits for purchases now at 25%, investors out the market, even the doer upper boys and girls who have been watching all the property programmers on telly for the last few years and were playing at being developers ( its fun in a rising market ) have bailed out, as noted in todays news, and mortgages hard too come by unless you have squeaky clean credit for the last 6 years, it all stacks up too a real soup off misery for the housing market or associated industries.

 

Oh does anyone know off anyone who has recently left an estate agents job, IE re-max, your move etc ?

[flecktimus]

Okay, i have been out all day so there is a lot too discuss, Copper has touched on a very interesting point, which to be honest i never thought off.

 

The figures out today showing an average increase of 7% for the year, represent actual sales, which volumes are down around 50% on same time last year, with numbers down and most off these sales being top end off the market the figures do not represent what is actually happening.

 

Copper rightly says there are 6300 houses for sale in Edinburgh and hardly any buyers, the ones that are not selling despite cuts off around 20% show that either there is no one there too buy, or clever buyers are stocking the properties they are after and biding there time till the vendors cut prices even more.

 

IMO Prices are down 20% at the moment across the board ( top end excluded 750k + )

 

As the year goes on, and going into early next year id guess we have another drop in store how much I'm not sure, best guess a further 10 to 20 percent on where we are now.

 

If the guy in the news is a barometer he started at 135, down too 125, now 115, and not a bite, by next Feb you'd think he would be down too 100, and a cheeky bid off 95, might just get it then as the guy will be SO fed up.

 

As for Estate agents Solicitors feeling the pinch, i think i can reveal the facts off what is actually going on now, Warner's shed 18 staff recently, and have now confirmed the ones that are left will be on a 2.5 day week as off September, Balfour Manson culled 30ish, Nielson's on a 4 day week, Somerville Russel are closing an Edin Based office, D.M HALL Surveyors culled 30, Graham and Sibbald 50,Northern Rock shedding 500, HBOS Closing its commercial banking division 300 gone. more news is coming through on a daily basis but you get the drift.

 

The Estate agents who rely solely on sales, IE Your Move, Re-max, Century 21,Mov8, i cannot get any info on what they are up too, all inquiries come back with words like we are bucking the trend, record sales etc etc, yet from studying there web sites its obvious not a carrot is selling, i suspect its Bravado, and id expect the walls will crumble shortly, as these guys actually pay a fee too wear the badge each month, with next too no sales only a fool would continue fighting a lost cause (mixu).

 

Latest figures show unemployment rising, inflation rising,mortgage rates not going too fall soon, deposits for purchases now at 25%, investors out the market, even the doer upper boys and girls who have been watching all the property programmers on telly for the last few years and were playing at being developers ( its fun in a rising market ) have bailed out, as noted in todays news, and mortgages hard too come by unless you have squeaky clean credit for the last 6 years, it all stacks up too a real soup off misery for the housing market or associated industries.

 

Oh does anyone know off anyone who has recently left an estate agents job, IE re-max, your move etc ?

 

Any more good news;)

[J.T.F.Robertson]

Any more good news;)

 

Once JrB re-reinterprets the latest data, it could be along any time now.

[coppercrutch]

You've got to remember that Edinburgh doesn't operate the same traditional estate agents = house sale way as the rest of the UK.

 

The percentage of house sales going through EA hands in Edinburgh is very small compared to the overall sales.

 

Most EA's in Edinburgh are a small department (one or two people) of a larger firm of solicitors. Thus means that commission from sales is not the only means of income these companies rely on.

 

Cheers for that. Think you have touched on this before. What interests me is in the past 5 years how many of these firms have focused too much on just property ? Have any of these companies got all their eggs in one basket by concentrating on the 'easy money' in property ?

 

I am pretty surprised at the extent of some of the job lossed JambosRBarry talks off. These are being kept pretty 'low visibility' are they not ? You'd think this would be all over the press.

[Chip Douglas]

Cheers for that. Think you have touched on this before. What interests me is in the past 5 years how many of these firms have focused too much on just property ? Have any of these companies got all their eggs in one basket by concentrating on the 'easy money' in property ?

 

I am pretty surprised at the extent of some of the job lossed JambosRBarry talks off. These are being kept pretty 'low visibility' are they not ? You'd think this would be all over the press.

 

Most of the mid-tier/top-tier law firms in Edinburgh would have ditched residential conveyancing years ago (if they haven't already) and simply retain these services for cross-selling purposes.

 

I can't think of any reasonable sized Firm in Edinburgh which has concentrated solely on residential property, this is a far too simplistic way of looking at the industry.

[Munch]

Cheers for that. Think you have touched on this before. What interests me is in the past 5 years how many of these firms have focused too much on just property ? Have any of these companies got all their eggs in one basket by concentrating on the 'easy money' in property ?

 

I am pretty surprised at the extent of some of the job lossed JambosRBarry talks off. These are being kept pretty 'low visibility' are they not ? You'd think this would be all over the press.

 

GSB Have culled 12 staff, out off a total off around 30 ish.

[coppercrutch]

Most of the mid-tier/top-tier law firms in Edinburgh would have ditched residential conveyancing years ago (if they haven't already) and simply retain these services for cross-selling purposes.

 

I can't think of any reasonable sized Firm in Edinburgh which has concentrated solely on residential property, this is a far too simplistic way of looking at the industry.

 

GSB Have culled 12 staff, out off a total off around 30 ish.

 

Right - something does not add up here.

 

On the one hand we have a few people who clearly have knowledge on these businesses saying that they dont concentrate on residential, their business is mostly based on other things etc...

 

On the other hand we have JrBarry telling us of SERIOUS job losses in various firms.

 

I am confused...

 

What I am interested in is the businesses who have an exposure to the residential property market. Of course Estate agents are included in this but so are many solicitors firms because of the nature of the Scottish system. I don't really think Law firms are that relevant ?

 

But then I look at this below:

 

http://www.warnersol.com/

 

"Warners is a well-established, high profile Edinburgh Law Firm, providing a wide range of Legal Services, for both individuals and the business community. "

 

Now we know that Warners have lost staff recently (I have seen this mentioned on a few different places)

 

Leslie Deans is another.

 

My question is just how many of Edinburgh's law firms/estate agents/Solicitors whatever - have had a finger in the 'property boom' pie ?

 

A finger that has dipped a little too much and could lead to the end of their business ? Stewart Saunders was the first. Surely we must have a good few more to come ?

[Chip Douglas]

Right - something does not add up here.

 

On the one hand we have a few people who clearly have knowledge on these businesses saying that they dont concentrate on residential, their business is mostly based on other things etc...

 

On the other hand we have JrBarry telling us of SERIOUS job losses in various firms.

 

I am confused...

 

What I am interested in is the businesses who have an exposure to the residential property market. Of course Estate agents are included in this but so are many solicitors firms because of the nature of the Scottish system. I don't really think Law firms are that relevant ?

 

But then I look at this below:

 

http://www.warnersol.com/

 

"Warners is a well-established, high profile Edinburgh Law Firm, providing a wide range of Legal Services, for both individuals and the business community. "

 

Now we know that Warners have lost staff recently (I have seen this mentioned on a few different places)

 

Leslie Deans is another.

 

My question is just how many of Edinburgh's law firms/estate agents/Solicitors whatever - have had a finger in the 'property boom' pie ?

 

A finger that has dipped a little too much and could lead to the end of their business ? Stewart Saunders was the first. Surely we must have a good few more to come ?

 

What is there to be confused about? The residential property "slump" is not likely to have a material bearing other than on smallish Firms who count upon the residential market for a sizeable part of their income.

 

Warners are one of the big players in the residential market, if not the largest. They've shed 20 odd staff and as of September, the remaining staff are likely to be working a 2.5 day week. Warners also have a reasonable sized commercial arm and that income will probably be offset against their exposure to the current residential market climate.

 

All Firms have diversified over the years, with most big Firms ditching the staple diet of criminal and residential conveyancing. These are now primarily the domain of one man set-ups and small players in the market.

[Munch]

Right - something does not add up here.

 

On the one hand we have a few people who clearly have knowledge on these businesses saying that they don't concentrate on residential, their business is mostly based on other things etc...

 

On the other hand we have JrBarry telling us of SERIOUS job losses in various firms.

 

I am confused...

 

What I am interested in is the businesses who have an exposure to the residential property market. Of course Estate agents are included in this but so are many solicitors firms because of the nature of the Scottish system. I don't really think Law firms are that relevant ?

 

But then I look at this below:

 

http://www.warnersol.com/

 

"Warner's is a well-established, high profile Edinburgh Law Firm, providing a wide range of Legal Services, for both individuals and the business community. "

 

Now we know that Warner's have lost staff recently (I have seen this mentioned on a few different places)

 

Leslie Deans is another.

 

My question is just how many of Edinburgh's law firms/estate agents/Solicitors whatever - have had a finger in the 'property boom' pie ?

 

A finger that has dipped a little too much and could lead to the end of their business ? Stewart Saunders was the first. Surely we must have a good few more to come ?

 

http://news.bbc.co.uk/1/hi/business/7556220.stm

 

Its a simple calculation property purchases are down around 60 to 80 percent on levels they were at last year, obviously these businesses were geared up to cope with all the work involved in the legal work, and the lucrative estate agency commissions.

 

All the fat needs too be trimmed first, followed by more cuts ie days worked, followed by more cuts, followed by eventual closure off some who have no financial backbone too ride out this first wave of the crunch.

 

First too collapse has too be the estate agents who rely solely on commissions Remax etc, thats just simple fact, the faces are starting too fall off the office web sites now.

 

Next too go will be the smallish solicitors and estate agents, maybe some older guys nearer retirement will just wrap it up, id expect too see that by the end off the year.

 

Id imagine there will be a few surprises though off the Stewart Saunders type size businesses that will go.

 

Possibly a few companies may merge, before the crunch finishes.

 

There is a tiny glimmer off hope in Brown and Darling pulling some rabbit out a hat ( I'm sorry if you just spat your tea all over the screen) however its a save our skins situation for them, and they might surprise us all with a rescue package.

 

Id say there is more chance of hobo winning the big cup though than these 2 fools actually making a decision.

 

Plus on the back off the Glasgow by election loss, the fall of Kircauldy is inevitable which will be the final nail in his coffin ( thank the lord)

 

What do you think copper ?

[Sherlock]

...My question is just how many of Edinburgh's law firms/estate agents/Solicitors whatever - have had a finger in the 'property boom' pie ?

 

A finger that has dipped a little too much and could lead to the end of their business ? Stewart Saunders was the first. Surely we must have a good few more to come ?

 

Stewart Saunders wasn't a law firm / solicitors, they were simply Estate Agents.

 

It wasn't a finger they had in 'the 'property boom' pie' so much as a whole fist. In a market where Estate Agents represent only a minority of sales with the law firm/solicitors of the ESPC dominating.

 

Reports of Estate Agents struggling/folding is not indicative of the whole Edinburgh market as their market share is only a small proportion of the whole market.

[blairdin]

Talking about viewings- I was up at the weekend to watch the mighty jambos and went to view a property that I was thinking about buying.

 

Couldn’t believe it, whilst I was there 4 different groups of people viewed the same property and it’s been on the market for at least 5 mths.

 

I have had my house on the market for 3 months and had 2 viewings

 

This is relevant and is happening across Scotland.

 

People wouldn't be viewing houses if they believed they were overpriced or outwith their means.

 

As someone who was planning to sell, like most others I've been trying to second guess what is happening now and what is likely to happen in the months ahead.

 

IMHO the problem with the housing market just now isn't the price of property, it's the banks lending criteria for mortgages. In the last year to eighteen months mortgage lenders have went from one extreme (where they give anybody a loan) to the other (where only a minority with a huge deposit get one). So, only a minority of these people viewing properties will secure a mortgage to bid for and complete the purchase.

 

The banks will find a middle ground. The banks need mortgage customers every bit as much as their customers need mortgages.

 

If Westminster scrap stamp duty, that will help hugely. They have to. No doubt we'll see another hidden tax (VAT probably) increased elsewhere to cover it, but that's Labour for you. Stamp duty is a very significant expense for the house buyer to find - either from their deposit savings or added onto their mortgage. I really think we will see 95% mortgage offers become far easier to come by when this is scrapped and this will kickstart things IMHO.

 

I think any drop in house prices now is artificial. It's a reflection on peoples need to sell quickly or urgently, here and now, and not the value of the property.

 

I'm confident I will sell my place easily next year for more than it s worth now.

[footieman]

IMHO the problem with the housing market just now isn't the price of property, it's the banks lending criteria for mortgages.

 

And why do you think the banks have changed their criteria?

[blairdin]

And why do you think the banks have changed their criteria?

 

No denying that.

 

As I said, IMHO banks have gone from on extreme to the other. People who are sensible and capable of repaying a mortgage are simply unable to get them. Hence I think banks will find a middle ground.

 

Mortgages need to be granted based on monthly affordability. People like John Mitchell are there to help people guarantee that they can achieve this by insuring this income if it dries up through no fault of their own.

[flecktimus]

This is relevant and is happening across Scotland.

 

People wouldn't be viewing houses if they believed they were overpriced or outwith their means.

 

As someone who was planning to sell, like most others I've been trying to second guess what is happening now and what is likely to happen in the months ahead.

 

IMHO the problem with the housing market just now isn't the price of property, it's the banks lending criteria for mortgages. In the last year to eighteen months mortgage lenders have went from one extreme (where they give anybody a loan) to the other (where only a minority with a huge deposit get one). So, only a minority of these people viewing properties will secure a mortgage to bid for and complete the purchase.

 

The banks will find a middle ground. The banks need mortgage customers every bit as much as their customers need mortgages.

 

If Westminster scrap stamp duty, that will help hugely. They have to. No doubt we'll see another hidden tax (VAT probably) increased elsewhere to cover it, but that's Labour for you. Stamp duty is a very significant expense for the house buyer to find - either from their deposit savings or added onto their mortgage. I really think we will see 95% mortgage offers become far easier to come by when this is scrapped and this will kickstart things IMHO.

 

I think any drop in house prices now is artificial. It's a reflection on peoples need to sell quickly or urgently, here and now, and not the value of the property.

 

I'm confident I will sell my place easily next year for more than it s worth now.[/QUOTE]

 

That my friend is a bold statement.

 

I hope you are correct but unfortunately on this occasion you may be proven wrong. But it really doesn?t matter, as you are already on the property ladder. If your house falls in price the new property you will buy should have fallen as well, unless you are selling up for profit.

[footieman]

No denying that.

 

As I said, IMHO banks have gone from on extreme to the other. People who are sensible and capable of repaying a mortgage are simply unable to get them. Hence I think banks will find a middle ground.

 

Mortgages need to be granted based on monthly affordability. People like John Mitchell are there to help people guarantee that they can achieve this by insuring this income if it dries up through no fault of their own.

 

 

Maybe am just out the loop due to being in the fortunate position of being mortgage free but I find it hard to believe that if I went to a mortgage lender tomorrow and asked for 3.1/2 times my salary to buy a house, a figure that historically has been the maximum lending limit, they wouldn?t be interested in dealing with me.

 

The thing is 3.1/2 times my salary currently wouldn?t get me the house I would be looking to buy, but is that the mortgage lenders fault?

[The Old Tolbooth]

Maybe am just out the loop due to being in the fortunate position of being mortgage free but I find it hard to believe that if I went to a mortgage lender tomorrow and asked for 3.1/2 times my salary to buy a house, a figure that historically has been the maximum lending limit, they wouldn?t be interested in dealing with me.

 

The thing is 3.1/2 times my salary currently wouldn?t get me the house I would be looking to buy, but is that the mortgage lenders fault?

 

Lending is not based on income multiples anymore mate, it's based on affordability. A lender will now look at your incomings against outgoings and make a decision on how much per month you can afford, and then measure that against how much money you can borrow.

 

Hope that makes sense.

[coppercrutch]

Maybe am just out the loop due to being in the fortunate position of being mortgage free but I find it hard to believe that if I went to a mortgage lender tomorrow and asked for 3.1/2 times my salary to buy a house, a figure that historically has been the maximum lending limit, they wouldn?t be interested in dealing with me.

 

The thing is 3.1/2 times my salary currently wouldn?t get me the house I would be looking to buy, but is that the mortgage lenders fault?

 

It is pretty simple after all isn't it..

 

All this talk of 'nobody getting mortgages' is nonsense. I am sure anyone who works in these places will confirm this.

 

The simple fact is people can get mortgages. Just like they could 2 years ago, or 5 years ago, or 15 years ago. Only problem being - the mortgage they can get does not cover the house they want to buy.

 

As for thos ewho think the problem is banks lending and not house prices that is an insane idea. How do you think house prices go to this level in the first place.

 

Stupid lending caused stupid house prices.

Sensible lending will cause sensible house prices.

 

Credit is heading back to normal. House prices will head back to normal. Unless everyone starts buying houses with cash - which they won't.

 

Credit buys houses - People do not.

 

As for the info on solicitors etc.. cheers for that. I do not know enough about these places to know how much of thier income is simply from residential sales. I would hazard a guess that more than a few have got lazy in the past few years and moved towards the 'easy money' ..Only time will tell.

 

Regarding Brown and Darling I do not see what they can do. Why would they scrap stamp duty ? It has been shown that this does nothing. They also can't afford to. Tried in the early 90's - failed. The situation today is far worse so the chance of it working now is slim to non existant. What lese can they do ? Unless the Government starts offering 100+% mortgages at low interest rates I fail to see how they can do anything. Anyway they shouldn't be doing anything this should be left to sort itself out. I would not put it past this useless Government to come out with some hair brained idea that may delay the pain for a very short period. However the longer they delay it the worse it will get.

 

This is not a 'housing crisis' we are going through today. The real housing crisis was in the last 5 years. What we are seeing today is simply the effect, not the cause.

 

Whether you agree with me or not does not really matter. The end question is this. What do you think will happen ?

 

(1) House prices revert to their long term average - this being 3-4 times the average salary of an area. Edinburgh just now is nearer 8 times.

 

Or

 

(2) The whole historical house price trend has been broken. Forever. You either bought a house before 2003 or you will never be able to buy one relatively affordably ever again. The long term average of the last 50 years has now gone. This will from today onwards be replaced with a long term average of 8 times the average salary.

 

Now I do not discount option (2) happening. Nothing is impossible after all. However if you fall into this category I have to ask - why ?

 

You may as well bet on a 50-1 horse in the Grand National. It has a faint chance of coming in but you wouldn't bet your house on it.

 

Pardon the pun.

[footieman]

Lending is not based on income multiples anymore mate, it's based on affordability. A lender will now look at your incomings against outgoings and make a decision on how much per month you can afford, and then measure that against how much money you can borrow.

 

Hope that makes sense.

 

Yeah it makes total sense and seems a much better way of working things tbh. As I said, and demonstrated, its been a while since I have been involved in the mortgage market which is why I tend not to post on these threads, even although I view them despairingly sometimes.

[coppercrutch]

Lending is not based on income multiples anymore mate, it's based on affordability. A lender will now look at your incomings against outgoings and make a decision on how much per month you can afford, and then measure that against how much money you can borrow.

 

Hope that makes sense.

 

But that is the problem is it not ?

 

These 'affordability calculators' only came in about 2003 (Ish).

 

Before that the 3.5 salary/5% deposit minimum worked perfectly well. Instead of letting the house price increas stop at a sensible level, they introduced new rules to allow people to borrow more.

 

We all know what happens with these 'affordability' calculations. Many mortgage salespeople have been pushed for more sales. They have taken advantage of this to wangle the system to give people more money than they can actually afford. I am sure you know of this.

 

Wangling a basic 3.5 X salary system must be a whole lot more difficult.

 

So you reckon the lenders will go back to this soon Mr Mitchell ? Or have some already started ?

[The Old Tolbooth]

But that is the problem is it not ?

 

These 'affordability calculators' only came in about 2003 (Ish).

 

Before that the 3.5 salary/5% deposit minimum worked perfectly well. Instead of letting the house price increas stop at a sensible level, they introduced new rules to allow people to borrow more.

 

We all know what happens with these 'affordability' calculations. Many mortgage salespeople have been pushed for more sales. They have taken advantage of this to wangle the system to give people more money than they can actually afford. I am sure you know of this.

 

Wangling a basic 3.5 X salary system must be a whole lot more difficult.

 

So you reckon the lenders will go back to this soon Mr Mitchell ? Or have some already started ?

 

I cant see lenders going back to it (although some still advertise that they do it), because believe it or not, they have to show a degree of responsibility to borrowers, even more so nowadays and the affordability calculators are probably the most accurate way of determining how much someone can responsibly afford to pay back.

 

It's based now on disposable income, which I feel is a much fairer system because the old income multipliers were really flawed with some lenders. At the end of the day, if you have disposable income, then it's not affecting your ability to pay the rest of your bills/commitments etc.

[The Old Tolbooth]

We all know what happens with these 'affordability' calculations. Many mortgage salespeople have been pushed for more sales. They have taken advantage of this to wangle the system to give people more money than they can actually afford. I am sure you know of this.

 

 

If a lender asks for proof of income, how do you wangle the system?

 

Some lenders affordability calculators are more flexible than others, but then not all peoples finances are the same as I explained above, and if a lender requests proof of someones income and bank statements, then it gives them a pretty good judge of the person they are dealing with.

 

I've had a couple of clients accepted for a mortgage where the income was sufficient, however when the lender requested their bank statements, they were then refused because of the poor way they maintained their bank account, nothing wrong with their credit rating, it's just the lender didn't fancy taking someone on who was in their over draft month after month.

[flecktimus]

But that is the problem is it not ?

 

These 'affordability calculators' only came in about 2003 (Ish).

 

Before that the 3.5 salary/5% deposit minimum worked perfectly well. Instead of letting the house price increas stop at a sensible level, they introduced new rules to allow people to borrow more.

 

We all know what happens with these 'affordability' calculations. Many mortgage salespeople have been pushed for more sales. They have taken advantage of this to wangle the system to give people more money than they can actually afford. I am sure you know of this.

 

Wangling a basic 3.5 X salary system must be a whole lot more difficult.

 

So you reckon the lenders will go back to this soon Mr Mitchell ? Or have some already started ?

 

One major change that we have to take into account when we look at higher borrowing are that women now have higher disposable incomes and are now in many cases at the same earning level as men, so in effect this has allowed couples to go for higher mortgages than historically has been the case in the past

[coppercrutch]

If a lender asks for proof of income, how do you wangle the system?

 

Some lenders affordability calculators are more flexible than others, but then not all peoples finances are the same as I explained above, and if a lender requests proof of someones income and bank statements, then it gives them a pretty good judge of the person they are dealing with.

 

I've had a couple of clients accepted for a mortgage where the income was sufficient, however when the lender requested their bank statements, they were then refused because of the poor way they maintained their bank account, nothing wrong with their credit rating, it's just the lender didn't fancy taking someone on who was in their over draft month after month.

 

There is a link from another forum I frequent. Some guy who works for one of the big lenders spilling the beans on many dodgy goings on. In brief the new systems are far easier to manipulate. Forget a debt here, round up a a number here etc..

 

Maybe if there is someone reading this thread "in the know" they can spill the beans. I will copy the link in when I can get it. Interesting stuff.

 

I suppose the proof is in the pudding though. Sticking to the old 3.5 multiples/5% deposit system possibly would have stopped this mess about 4 years ago. What you think ?

 

In fact I reckon deposits have been the main issue.

 

Really - lending someone 150k over the next quarter of a century...and not even asking for ONE PENCE as a deposit....

 

That is beyond stupid. Children aged 4 at nursery could point out the flaws in that system..

 

As an aside a very interesting article below. Looks like the message to the Government from the BoE and the man tasked at looking into this mess is pretty straightforward:

 

Leave it be. It will sort itself out.

 

http://www.independent.co.uk/news/business/news/bank-is-powerless-to-rescue-housing-king-warns-894703.html

 

 

A little common sense at last. Whether the morons at number 10 & 11 actually take the advice is another matter..

[Munch]

One major change that we have to take into account when we look at higher borrowing are that women now have higher disposable incomes and are now in many cases at the same earning level as men, so in effect this has allowed couples to go for higher mortgages than historically has been the case in the past

 

Is there any products where you dont need too show proof of income or statements there used too be self certifiction mortgages i recall?

[coppercrutch]

One major change that we have to take into account when we look at higher borrowing are that women now have higher disposable incomes and are now in many cases at the same earning level as men, so in effect this has allowed couples to go for higher mortgages than historically has been the case in the past

 

Good point. However couples now have much, much more unsecured debt than ever before. (Credit Cards's etc..)

 

I know a common plan that mortgage salespeople do is to take the person applying's word that they are just about to pay off their debts. So this is left off the 'affordablilty calculator'.

 

Hence the amount they can borrow is much more than they can actually afford. I am suire some places check these things thouroughly. However I imagine many do (In the past) very little.

 

You only have to look at how many problems people are having today to tell that lending has been stupid. A small rise in interest rates and times getting a little tougher and it seems half the country is on its knees. Without such huge debts in our country this would be a far smaller problem.

[ArmiyaRomanova]

(2) The whole historical house price trend has been broken. Forever. You either bought a house before 2003 or you will never be able to buy one relatively affordably ever again. The long term average of the last 50 years has now gone. This will from today onwards be replaced with a long term average of 8 times the average salary.

 

Interestingly, in Japan, where land is at a premium and property prices absolutely insane, 50 year and even 75 year mortgages are not unusual - you pass your debt down to your children and grandchildren, who may one day manage to pay it off and own their home outright (though with many homes built from wood due to the risk of earthquake, it's the land that's the important aspect of the deal).

 

I suspect that if we're to see your option 2 in effect in Britain, lenders will have to adopt longer mortgage terms - and, crucially, buyers will have to accept these terms. And somehow I don't see the latter happening.

[blairdin]

That my friend is a bold statement.

 

I hope you are correct but unfortunately on this occasion you may be proven wrong. But it really doesn’t matter, as you are already on the property ladder. If your house falls in price the new property you will buy should have fallen as well, unless you are selling up for profit.

 

Indeed.

 

In some ways I accept CC is right in that the Edinburgh market is going to level off. However, I don't believe people will end up in negative equity. A flat that sells for $100,000 (apologies, but keyboards here don't have pound signs) this year may still be $100,000 next year. Clearly, next year $100,000 won't buy you as much as it will this year. Inflation sees to that.

 

I'm fortunate (OK, some would say unfortunate) that I live in Falkirk and am not exposed to this. The market there is pretty good just now - not brilliant, but better than most - is predicted to get better in the current climate. Improvements in public transport, new retail/leisure developments and the new Forth Valley Hospital on my doorstep add to this. At circa $75k my 2 bedroom tenement flat is currently worth just over half to two-thirds of what a similar flat in Polworth will set you back.

 

Buyers frozen out of Edinburgh (and Glasgow) because their deposits are not big enough are looking to the commuter towns where their deposits go much further. I can travel from Camelon to my work in Edinburgh city centre in 45 minutes. Colleagues I work with take longer traveling in from Musselburgh and East Craigs respectively. So what are the benefits of living in Edinburgh? This penny is starting to drop with alot of people.

[Munch]

Just heard 11 staff been made redundant from a leading Edinburgh Solicitor, this type off news is happening on a daily basis now.

 

With so many property related jobs going where are all these people going too find jobs? it would need too be in another line off work id say as there is no one actually hiring staff in this industry.

 

Interesting about the 75 year mortgages its like tick on the never ever account, i cant see that taking off here.

[flecktimus]

Is there any products where you dont need too show proof of income or statements there used too be self certifiction mortgages i recall?

 

Yes you are correct, the self certification mortgage was aimed at the self employed but i think it received a bit of abuse.

 

I am sure Johnmitchell could gives us a we bit of info on that subject

[Sherlock]

Just heard 11 staff been made redundant from a leading Edinburgh Solicitor, this type off news is happening on a daily basis now.

 

With so many property related jobs going where are all these people going too find jobs? it would need too be in another line off work id say as there is no one actually hiring staff in this industry.

 

Interesting about the 75 year mortgages its like tick on the never ever account, i cant see that taking off here.

 

Which firm is this?

 

And is it property related jobs being lost or is it secretaries that are being let go?

[The Old Tolbooth]

 

Maybe if there is someone reading this thread "in the know" they can spill the beans. I will copy the link in when I can get it. Interesting stuff.

 

 

I didn't say I don't know the dodges, I just don't do them. It will only come back and bite you hard on the arse if you do, and the FSA are hard enough to keep happy at the best of times without having them on your case for dodgy mortgages.

 

As for missing a debt here and there, you cant really miss a debt because a full credit search by a lender will show what credit someone has, and if they don't declare something then a lender quite rightly gets suspicious and wants to know why.

 

It's a lot easier to add a number here and there to figures such as salary, especially for fast track mortgages where hardly any checks are made (which I don't agree with) to actually check their salary. I reckon at least one pay slip, or an employers reference should be asked for in all cases as some sort of proof. I would certainly never get into that nonsense because I really don't fancy chucking my career down the pan, and having the fraud squad at my door and I've walked away from quite a few mortgages because of what a client asks me to falsify.

[david mcgee]

I didn't say I don't know the dodges, I just don't do them. It will only come back and bite you hard on the arse if you do, and the FSA are hard enough to keep happy at the best of times without having them on your case for dodgy mortgages.

 

As for missing a debt here and there, you cant really miss a debt because a full credit search by a lender will show what credit someone has, and if they don't declare something then a lender quite rightly gets suspicious and wants to know why.

 

It's a lot easier to add a number here and there to figures such as salary, especially for fast track mortgages where hardly any checks are made (which I don't agree with) to actually check their salary. I reckon at least one pay slip, or an employers reference should be asked for in all cases as some sort of proof. I would certainly never get into that nonsense because I really don't fancy chucking my career down the pan, and having the fraud squad at my door and I've walked away from quite a few mortgages because of what a client asks me to falsify.

 

Mr Mitchell, i think i have seen your halo glowing in Fife, or was it Mossmorran?

 

So called IFAs have been earning large commissions for years placing clients with mortgages.

Whether these clients could afford it or not for many was incidental because with house prices rising at 10% a year even if they missed payments the equity was more than they owed.

 

When working on the new system it was all too easy to lose the car loan or the kids school fees.

 

Coppercrutch is absolutely right, it should go back to the three times income multiplier.