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Housing jitters could spell trouble for sellers

1 July 2010

Uncertainty reigns in the housing market, as ongoing concerns over the wider economy and the effect of public spending cuts continue to muddy the water.

According to the latest figures from Nationwide, residential property values in the UK as a whole increased by just 0.1% in June, slowing considerably from the 0.5% rise the previous month, and the 3% hike since the start of the year. Other recent reports have indicated an overall fall in the average house price.

The sudden slowdown has sparked fears that over-supply, caused by homeowners who had been waiting for the market to improve before selling, may pull the rug out from under the nascent recovery and send prices into a double dip in the coming months.

The picture may be somewhat different in Scotland though, where research conducted by Glasgow University for the Glasgow Solicitors Property Centre (GSPC) suggests average prices in the west of the country have risen by 6.7% in the past three months, reversing a dip in the previous quarter, to reach their highest level since summer 2008, about 8% below the late 2007 peak. The average time to sell a property has also fallen, from 127 days in March to 72 in June.

Nonetheless, GSPC remains cautious about Scotland’s prospects for a sustained rise in prices.

According to Professor Gwilym Pryce of the Urban Studies Department at Glasgow University, who conducted the independent research: “These positive results may signify the beginning of a more sustained recovery, but it is likely that progress will remain sensitive to consumer confidence and the prospects for growth in the wider economy.”

GSPC chairman Michael Samuel added: "While we expect the market to remain healthy, we think it is very unlikely that prices will continue to rise at this pace."