First-time buyers lead property sales surge

Lewis Wyse and partner Crysta McGowan have bought their flat in Pilton through a shared equity scheme. Picture: Jane Barlow
Lewis Wyse and partner Crysta McGowan have bought their flat in Pilton through a shared equity scheme. Picture: Jane Barlow
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FOR SALE, one property market, a little battered around the edges, ­currently undergoing major renovation with potential for reasonable improvement.

Fairly deep pockets might still be required but suddenly the signs are definitely there – Edinburgh house sales are moving on up.

Tough economic times had thrown the property scene into the doldrums, leaving despairing potential buyers – many of them first-timers – trapped by high rents, eye-watering deposits and the challenge of finding a place to buy in a stagnant marketplace.

Now new August to October sales figures from ESPC have revealed sales across Lothian are up 42.5 per cent on the same period as last year, suggesting that, at last, there are definitely “house moves” afoot.

It could get even better at the start of next year, says ESPC spokesman Neil Harrison, as that is when the ­government’s Mortgage ­Guarantee Scheme kicks in, a kind of insurance policy for lenders to help encourage them to provide loans without shouldering as much of the potential risk as a normal mortgage carries.

That could even encourage a return to the 95 per cent mortgage, helping ease the pain for first-time buyers currently faced with finding massive deposits. “That would help a lot of people in rental accommodation,” explains Neil. “Rents have increased year on year and that’s made it harder for people to find a deposit. It’s one of the blocks for first-time buyers – they can afford the repayments on a mortgage but the cost of rent means it’s more difficult to build up the deposit they need to give the bank for a property.

“If the deposit becomes five per cent rather than 20 per cent, it will open up more first- time buyers to the market. We are anticipating a pick-up in the market early next year.”

It could help avoid the kind of situation that trainee GP Nicola Henderson found ­herself in when she tried to buy her first home. “I’d saved hard and had enough for a 15 per cent deposit, and even though I have a good job and income, I needed help from parents and grandparents,” she says. “I had a mortgage organised with the bank. But it wasn’t made clear that because I was buying a brand new property, I actually needed a 25 per cent deposit – around £32,000,” says the 27-year-old.

Eventually an adviser at FirstMortgage in Walker Street tracked down the only lender willing to mortgage the new property on a 15 per cent deposit. She moved in to her £135,000 Granton Harbour home nearly three months ago.

“I was lucky because I was renting from friends at the time, so my rent wasn’t as high as it could have been.

“But I still found it really hard. I can only imagine how hard it must be for a lot of other people.”

Finding a large deposit is just one element of buying a home, of course. The other is raising the remainder of the £208,886 which ESPC say is currently the average price of an Edinburgh home.

And while all the pointers suggest movement in the market, ESPC business analyst David Marshall warns it’s still early days: “It’s true that conditions are more favourable for sellers than has been the case for some time, but it’s important to keep things in perspective. The number of homes selling has risen significantly but this comes from a low base and sales are still about 25-30 per cent below peak levels.

“Increasingly we are seeing a return to the ‘offers over’ approach to marketing properties, 44 per cent of homes brought to the market over the last three months have used this method – up from 33 per cent at this point last year.”

It’s still better news than we’ve come to expect, backed up by property consultants CKD Galbraith Edinburgh, who say latest figures show the property market is showing “encouraging levels of activity” with viewings and the number of properties for sale over the July to September quarter up by 78 per cent and 30 per cent respectively.

Alasdair MacKenzie, head of residential at CKD Galbraith’s Edinburgh office, adds: “Market confidence has been ­continuing to grow throughout the year and we have seen increasing willingness from buyers and sellers to make their next move. The statistics demonstrate an improving picture for the market and we forecast this is likely to continue into next year.”

Helping the market along, according to one mortgage broker, are new Scottish Government help to buy schemes which peg deposits at five per cent and share the equity with buyers. These are becoming increasingly popular with first-time buyers.

“We have known for a long time how badly Help to Buy was needed to support Scotland’s first-time buyers and the market as a whole,” says Ian McGrail, managing ­director of Edinburgh-based FirstMortgage. “We have ­already ­processed over 200 ­applications with a 97 per cent approval rate.”

One scheme is aimed at fuelling the construction market by offering support to buyers of new-build properties, while others target purchases of housing association and private properties, sharing the equity with the buyer which is then repaid once the properties are resold.

Yet Ian points out that many buyers don’t even know they exist. “We are doing all we can to educate our clients on the benefits of Help to Buy and how it works.”

And he points out that many first time buyers – even those who enter Help to Buy schemes – still struggle to find sky-high deposits. “Many are still heavily reliant on the bank of mum and dad or nowadays, even gran and grandad for support with deposits,” he adds.

Some, such as Lewis Wyse, 18, and Crysta McGowan, 20, end up living with family while they attempt to raise the funds they need to move.

The couple ended up ­lodging in his mum’s Silverknowes home, giving up nights out and saving every spare penny – all a strain on their relationship.

Now, however, they are ­settling into their comfortable two bedroom flat in West Pilton Way, their mortgage is manageable and, finally, they have a place they can call their own.

Lewis, who works for Edinburgh City Council’s roads department, and Crysta, a nursery practitioner, moved into the flat in summer after striking a shared equity deal with housing association Places for People. “We’d been looking for a house for a while,” says Lewis. “We started looking at older properties, but there was no way we could get to ­paying a 10 per cent deposit. We started to think we’d be staying with my mum forever. It started to get us down.”

The couple had their eye on the £125,000 new build property but it meant finding a £12,500 deposit. However talks with the housing association and their mortgage adviser revealed they would be eligible for a shared equity scheme – giving them a 60 per cent share of the property and a more manageable five per cent deposit. “And because the deposit is 5 per cent of the 60 per cent, it worked out at only around £4000,” adds Lewis.

“We’re paying £320 a month for the mortgage, which is lower than we expected to pay.

“It means we’ve had enough money to furnish the flat and make it really nice. And with it being a new place, we don’t have to do any work to it ­either, which is a huge help.

“We’re happy that we ­qualified for the scheme.

“We probably wouldn’t have had a house if it wasn’t for that.”