by a staff writer© The Herald
Originally published: 20.06.2008

Estate agents yesterday insisted the property market in Scotland would remain more stable than in the rest of the UK after the country's biggest mortgage lender warned that house prices are likely to fall by 9% this year.

The prediction made by Halifax Bank of Scotland in its trading update was almost double the "mid-single digit" fall previously estimated for 2008 and the bank said the forecast would cause its bad debts to rise as more borrowers struggle with repayments.

No figure was available for Scotland and while a spokesman for the bank said they expected the market north of the border to "outperform" the UK, he added that Scotland was "not immune to the same pressures we are seeing across the rest of the UK".

Scottish estate agents admitted that the market was currently "difficult" and prices could fall slightly as houses were taking longer to sell, but they added that buyers and sellers also needed to change their approach to moving house to accommodate the recent changes in the industry.

"My feeling is there is going to be a slight reduction in prices this year. I would call it an adjustment," said Mairi Eckford, managing director of Countrywide estate agents. "When houses were selling in days they were selling too quickly.

"The market was moving too quickly and on the back of that house prices were increasing too much.

"We have a slowing down of the market, which is sensible. The number of buyers in the system are fewer, there are fewer closing dates and fewer offers, so that has an obvious impact on prices.

"We haven't had the same increases in house prices (as in England). We have had a brisk market but we haven't had rampant increases so we won't see the same decreases."

Property prices in Scotland increased 7.4% over the last year and the average cost of a home is now £150,257, according to official statistics published last month by the Registers of Scotland.

At the same time, houses are staying on the market for longer, with many buyers selling their own homes before considering putting an offer in for a new property.

Sharon Donaldson, sales director of Slater Hogg & Howison, said customers had to adapt to the changed market.

"The right price will generate activity and once you get the interest the price will find itself.

"People who are prepared to present their property to the market at what initially appears to be a low asking price are getting relatively close to what they hoped for.

"For people who are buying and selling in the same marketplace, what they perceive to lose in the sale of their own house they are gaining in the purchase of another. They are no worse off."

She said that slowing down the selling process could also help improve difficulties in the market.

"The biggest problem is people panicking," she said. "There is no doubt that things are difficult. But it is manageable.

"Most people are selling before they buy but you still get people who are not prepared to sell their homes unless they know where they are going to.

"When they find a property they want to buy they go in with a date of entry of three or four months' time.

"They put their own house on the market and then panic after two or three weeks if they don't get the activity. We need to look at the marketplace to extend the date of entry period to six or nine months.

"Everybody just needs to calm down and think more sensibly."

HBOS said its revised prediction on house price falls reflected the UK's slowing economy, a rise in unemployment and limited scope for interest rate cuts amid soaring inflation.