Downturn in housing market as credit crunch hits mortgages
By RYAN TAYLOR
SHETLAND has witnessed a downturn in housing demand, with a growing number of properties waiting months on end for new owners to snap them up.
The slowdown has been attributed to the global credit crunch, which has caused house prices to tumble over the last 12 months.
Director of Lerwick surveyors David Adamson and Partners, Stephen Johnston, said worldwide economic woes were making mortgages harder to come by, leaving more and more houses on the shelf.
“The obvious thing to say is sales have slowed up a bit. Properties aren’t selling as fast as they used to, and there is probably an accumulating number on the market,” he said.
“I don’t see anything in the local economy that would have caused it. I think it comes down to the credit crunch and the shortage of mortgages. “It’s taking longer to arrange a mortgage now. There are all sorts of restrictions and anyone who has tried to borrow a high percentage is having more difficulties than they would have had a year ago.
“Nowadays, if you are looking for 75 to 80 per cent mortgages there are all sorts of restrictions.”
Mr Johnston said at least part of the slowdown could be explained by seasonal trends, especially the fact that the housing market tended to go quiet during the summer holidays.
But while a truer picture of Shetland’s housing market will emerge in the autumn, Mr Johnston said there was no mistaking that sales were slowing down.
A study of websites and newspaper property pages reveals as much.
A trawl through back copies of The Shetland Times found a house at 1 Wheelafirth in Tingwall in the 7th March issue.
It was on sale for offers over £175,000, and was still on solicitors Dowle, Smith and Rutherford’s website at the time of going to press.
A four bedroom house at Rozelle, 5 Baila Croft in Lerwick has also spent a long time on the market.
The house is on sale for offers over £189,000, but was advertised in The Shetland Times as far back as 30th May.
Similarly, the town’s 9 Gressy Loan can still be snapped up for offers over £155,000, despite featuring in the 23rd May issue.
Property pages are becoming visibly clogged with a backlog of unsold properties, as more and more house stay on the market for longer.
“We’ve certainly got less valuation instructions than we’ve had for a time,” said Mr Johnston.
“Overall things have been busy for the last three to four years and prices have gone up in that time.
“Up until the tail end of last year and the beginning of this year, people were getting a valuation done and adding a lump of money on to secure a property, but we don’t find that any more. People aren’t willing to go far above the asking price.”
Despite the fall in housing demand, prices have remained fairly steady, although the house at Armatoon in Gulberwick has dropped by £5,000 since it was advertised two months ago for offers over £180,000.
Mr Johnston said it was too soon to tell exactly how the housing market was shaping up because Shetland has relatively fewer houses than other places.
“In built up areas where there is a bigger volume of transactions it would be easier to tell,” he said.
Adding there was “no sense of panic”, he said Scotland seemed to be escaping much of the economic turmoil that has blighted the rest of the UK.
“Most reports say Scotland is bucking the trend, and maybe the further north you go the more you can do that.
“Although house prices went up before, they didn’t go up to ridiculous levels they did in some other areas. “There was a rise but a lot of that was just catch-up. But because of that there is less of a danger of prices going down significantly.”