Prices need to drop for market recovery

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A LEVEN estate agent has predicted 2013 will see a pick-up in house sales – but only if sellers come to terms with reality.

According to a survey carried by RE/MAX, a whopping 56 per cent of KY8 properties for sale through all estate agents in 2012 lingered on the market for up to a year or more, simply because they were too expensive.

Agent Kevin Jenkins said: “I think 2013 will be a better year.

“A lot of properties have been overpriced but people are starting to realise the prices have dropped.”

He warned: “People think prices will go up next year – but they won’t. We are still in a declining market.”

Although the housing market could hardly be described as stagnant, it has been appreciably slow – especially in direct comparison to the boom years up until 2007.

However, according to RE/MAX, towns such as Glenrothes are seeing a faster moving market than Levenmouth because like-for-like properties are more expensive here.

“Some of the prices in Leven are a lot higher and it’s the ones which have been sitting for months,” explained Mr Jenkins.

“The market has effectively rejected them.”

His findings were backed up by the Nationwide Building Society, which revealed a 3.3 per cent drop in prices across Scotland last year.

Commenting on the figures, Robert Gardner, Nationwide’s chief economist, said increases in the cost of living had far outstripped any wage growth.

“In real terms, wages fell back to levels prevailing in 2004,” he said.

“Moreover, housing still appears relatively expensive on a number of metrics.

“House prices are still around 5.1 times earnings, above the long-term average of 4.2. The monthly mortgage payment on a typical home is currently equal to around 33 per cent of average earnings, close to the 20-year average, even though interest rates are close to all-time lows.

“The uncertain outlook for the wider economy is also likely to have kept many potential buyers on the sidelines, unwilling to make such a major financial commitment until they feel more optimistic about the future.”

Stewart Filshill of Your Move in Leven said he thought the market would remain “fairly static” for the foreseeable future.

Most buyers were not making aspirational moves to houses with a “double garage” but rather moving out of necessity, he commented.

“The country is still struggling economically to get by and it is going to be a good two to three years before house prices rise,” he said.

“However, there’s still a market out there for people who are sensibly pricing their houses.”