Taking the temperature of Glasgow’s housing market
According to analysis by Rightmove, Aberdeen is the cheapest city for first-time buyers in the UK, but what is the state of the property market in Glasgow?
Rightmove’s analysis looked at houses with two beds or fewer and concluded that average mortgage monthly payments for first-time buyers in Aberdeen was £405 assumes a deposit of 20% and a term of 35 years.
But what about Glasgow?
Deposits
Deposits are a key factor for first-time buyers; steady income stream aside mortgage acceptance is borderline impossible without the upfront cash for a 10-20% deposit.
The prohibitive nature of deposits was the primary motivation for the UK Government introducing the Mortgage Guarantee Scheme, which covers lenders’ net losses if the loan defaults, so mortgage candidates without a 10% deposit can get on the ladder.
HM Treasury releases quarterly statistics on various elements of the scheme, including regional breakdowns.
Analysis reveals that Glasgow the value of property sold through the scheme was more than £186.5m, dwarfing Aberdeen’s at just over £62.4m.
This appears to confirm that, compared to Aberdeen, property market is healthier in Glasgow, indeed, the central belt as a whole – South Lanarkshire outsold on the scheme Aberdeen to the tune of more than £98m.
But it also highlights that the biggest barrier to getting onto the property ladder in Glasgow is the deposits with the city also outselling Edinburgh (the most expensive city for property in Scotland) through the scheme.
“It [the guarantee scheme] definitely helps the market there’s no doubt about that,” said Paul McNair, manager at First Mortgage’s Glasgow West End branch. “Especially working-class people, if the scheme wasn’t there they wouldn’t be buying.
“The biggest problem we have had in the property market in Glasgow over the past for or five years is local working-class people haven’t been able to buy.
“Due to competition, people have had to pay over the home report value and even if working-class people have the 5% for the deposit, they often don’t have the money to pay over the home report.”
Reasons to be anxious
McNair explained that a number of factors have driven up prices and made Glasgow’s property market more competitive from an influx of wealthy foreign students; the market being historically underprices as well as modern professionals priced out of London, Manchester and Edinburgh.
The mortgage guarantee scheme at the moment still requires around a 5% deposit and McNair passionately believes that if the Tories were to go through with promises with for a scheme with a 1% deposit, that it could make the market in Glasgow a lot fairer.
But McNair also acknowledged that “there’s still more demand than there are houses” and with interest rates remaining stubbornly high and the cost-of-living-crisis still raging on, there are reasons to be anxious.
This is also comes during a time when rent rises across the UK are outpacing wage growth and Shelter Scotland has suggested that the Scotland could be walking into a housing crisis as the Scottish Government is missing its social housing targets. The Glasgow Times reported on April 21 that more than 2,600 council properties are lying empty in the city.
If Aberdeen’s suffering from a slump in the market and attracting first-time buyers, Glasgow’s problems lie in demand and accessibility.
