2005-02-05

Stats & Money: Housing Market doubled in ten years

The value of Scotland's housing market has risen by over 50 per cent in the last three years and doubled over the last ten, new research revealed yesterday. 'Bank of Scotland' findings show the value of all private houses in Scotland rose by an estimated 20 per cent in 2004 to 165_000_million_GBP. In 2001 the value of residential housing stock was 108_million_GBP, while ten years ago Scottish private housing assets were worth 78_million_GBP. Experts said the statistics show Scotland is catching up with the property boom in England & Wales but predicted growth will slow in the coming year. Mr.Tim Crawford, the bank's group economist, said:
'The value of the private housing stock continues to grow and the family home remains the most valuable asset of the majority of households in Scotland'.
Over the last decade the value of the Scottish housing market rose by 112 per cent, the smallest increase in the UK. As a whole, UK housing stock has seen a 203 per cent rise over ten years. The value of stock rose the most in Northern Ireland, at 262 per cent, and Greater London, at 246 per cent. But due to a combination of economic growth, increased levels of new building and renovation Scotland has 'out-performed' the rest of the UK this year. Mr.Crawford said: 'There has been a lagging in house price growth in Scotland but in the past couple of years we have seen Scotland performing better -- playing catch up'. In Edinburgh average house prices went from 63_366_GBP to 163_909_GBP in the last ten years, a rise of more than 159 per cent. In Glasgow the average house price rose from 48_340_GBP in 1994 to 114_710_GBP last year, a rise of 137 per cent. In Aberdeen house prices have jumped from 60_881_GBP to 88_110_GBP, a rise of more than 44 per cent over the last ten years. Mr.Crawford predicted growth of three per cent for the coming year in Scotland while the rest of the UK drops off.
'In the next year there would be some potential for the value of the Scottish housing stock to rise a little more quickly than the rest of the UK', he said.
'Our house price forecast for Scotland is a slight increase, compared to a very modest fall for the rest of the UK'.
The research shows the total value of private sector housing assets in the UK was equivalent to around 3.8 times the value of housing secured debt last year. Five years ago the ratio was 3.5 times and a decade ago the ratio was 2.9 times. Mr.Crawford said:
'Housing asset values continue to grow at a faster rate than household debt, highlighting that household balance sheets are in good shape across the UK'.
Mr.Simon Fairclough, the marketing director at 'Edinburgh Solicitors' Property Centre', said average property prices in Edinburgh had gone up by 57.6 per cent over the last three years, from 102_646_GBP in 2001 to 161_783_GBP in 2004 and more than 150 per cent since 1994. And he predicted prices will continue to rise in areas where demand for quality property continues to outweigh supply. Mr.Dan Cookson, director of Myhouseprice.com, said house price growth may be slowing but at 15.3 per cent for the last year by his calculations it was still in the 'double digits' and 'not slowing as dramatically as other parts of the UK'. Mr.David Orr, chief executive of 'The Scottish Federation of Housing Associations', said house prices needed to come down to avoid homelessness. He said:
'If prices continue to rise and rise at the current speed it makes it more and more difficult for people to access any kind of appropriate housing'.
Price of Scottish home rises by half in three years, Louise Gray, The Scotsman, 2005-02-05, Sa

2 Comments:

Anonymous Anonymous said...

Am I the only one confused by all this? I always thought that if house prices went up, wages went up, and that was what inflation was all about.
Some houses have two salaries, while there is a rise in people living alone. People buy council houses, but there are also expensive regeneration developments... so I think it must all cancel out, and basically it all has to relate in some way to the cost of living (that's why it's called the cost of living)...
So I don't get it, how can house prices double in ten years if wages have not? Isn't inflation supposed to have been maintained at an even and low rate?
Nothing makes sense any more! I give up!!

2/07/2005 12:50:00 am  
Anonymous Anonymous said...

I know people who earned 16k back in 1994 and who make just 18 or 19k today. Back in 94 they could have borrowed 48k, but today would only get a mortgage of 54 or 57k (instead of the 96k they would need to buy the same house, or even the house that they already own).
That looks bleak, but then it doesn't work like that because if they can borrow 54 or 57k, if they sell for 96k a house they paid 48k for in 1994, then they would get 48k cash to add to their mortgage, so they would get 102k or 105k houses.
What this means is that, even though wages have risen at a low inflation rate, because house prices have doubled, these people are able to cash in on the house price increase to move up the property ladder to the next rung, to look at properties of 105k instead of 96k.
Even if you did not add an extension or renovate the house, meet a partner with a second income or enjoy the fact that demand for housing has brought regeneration to many areas... and even if you did not take advantage of lenders who give more than 3 times your salary, you would still -by doing nothing but waiting 10 yrs- be able to move up the property ladder today.
The low cost of living, even inflation is down to the fact that food, cars, clothes and holidays have stayed level or dropped in price, meaning that although your wages have kept up OK.
The problem that everyone's banging on about is to do with first time buyers who do not have a property making such a good return on equity. For someone who has rented for the past ten years, they would not have anything to add to the mortgage, and so as each year goes past, they have to look at cheaper and cheaper houses.
HTH ;)

2/07/2005 01:24:00 am  

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