Slowdown hits Falkirk home market

By Jo Perry
BBC Scotland news website, Tayside and Central reporter

The area has seen a slowing in the number of housing developments

For many people the most visible sign of the economic slowdown has been the fall in the value of their homes.

But the impact has not been limited to house prices, with those in the business of building new homes being among the worst hit.

In Falkirk, the decline in construction has had a knock-on effect on local suppliers like timber merchants and small sub-contractors, who have had to lay off staff.

Land values in the area have plummeted by between 50% and 70% in less than a year.

The situation has already had an impact on development plans. A £175m regeneration project in Bo'ness, due to begin in 2007, was dramatically altered and then delayed until next year at the earliest.

Speaking to local solicitors who have been in Falkirk for 20 years and they have never seen a market as challenging as this present one Ian Brown Remax estate agent Taking a snapshot of the downturn Town's retailers remain confident Bus company defies the gloom

Developers like ING Real Estate and Cala - who are both involved in local projects - are adopting an incremental, cautious approach to building.

There has also been a slowing-up of housing projects in Larbert's Kinnaird Village and the Braes.

Like much of the UK, house-builders in Falkirk are struggling to achieve regular sales and instead are offering incentives to shift new homes.

Research also shows there have been no significant land sales in the last six months.

According to local estate agent Ian Brown, from Remax, the effect of the banking crisis on the local housing market was abrupt and dramatic.

'Major slowdown'

He said: "We never felt it here until around July. From then we saw a drastic change in the third quarter of this year, and it is predicted to be the same until year end and into next year.

"It has been a huge blow to most sellers who have used our services before and sold their homes quickly, and now they're on the market for considerably longer.

"The average price has dropped to around £121,000, based on our sales, but the sales that started so well this year are now down by 31% on the same time last year."

Mr Brown puts the turmoil down to the banks, whose reluctance to lend continues to fuel problems in the market.

He said: "Demand is still great in Falkirk but the lenders are causing a major slowdown in the market.

"To put this into perspective, total mortgage approvals in the UK of 98,000 for the third quarter of 2008 failed to match the total of 101,000 in September 2007 alone.

Developers in Falkirk are offering incentives to sell new homes

"I did expect the market to slow down and correct itself but I don't think anyone foresaw the turmoil we have at present.

"Speaking to local solicitors who have been in Falkirk for 20 years, they have never seen a market as challenging as this present one."

Home owner Gary Nimmo, who lives in Stenhousemuir, has been struggling to sell his house for six months.

His three-bedroom semi-detached was first put on the market for £140,000. The price has now been dropped to offers over £125,000.

He said: "When we first put the house on the market there was an inkling that things were starting to slow but there were still plenty of sales going through.

"We live in an area where a new hospital is being built, there is a new school and supermarket so you would think there wouldn't be a problem.

"Now we're just keeping our fingers crossed that things will pick up. I'm confident that there will be a turnaround eventually."

Despite the gloom, Mr Brown said there had been areas of growth.

He added: "Many of our clients have found success by letting out their properties and selling in a more stable market.

"The demand for letting has been overwhelming and has filled the gap where first time buyers can't get a mortgage they will rent while they save to get their mortgages."

BBC Scotland is focussing on the impact of the credit crunch on Falkirk, with special reports on television, radio and online on Tuesday.