Housing experts have warned of a growing affordability crisis with sales falling through and chains collapsing

Housing experts have warned that Scotland's property market is facing a growing affordability crisis, with estate agents highlighting a pattern of sales falling through and chains collapsing. “Many households can’t afford to buy their ‘next step’ and builders can’t afford to build”, said one leading Scottish academic with policy professionals warning that higher risk lending had risen to its highest proportion of all mortgage lending since the financial crisis in 2008 and buyers are dealing with significant constraints as they contended with other cost pressures.

The chief executive officer of the Edinburgh Solicitors' Property Centre (ESPC) said that buyers were becoming more cautious, with a declining volume of sales impacted by mortgage rate pressures and costs. Paul Hilton said he had seen a “trend of hesitancy” over the past few months. “We’ve also seen a pattern of sales falling through and chains collapsing at higher levels than expected, which would signal difficulties with buyers securing mortgages at the required levels and needing to exit a sale,” he added.

Duncan Maclennan, emeritus professor of urban economics at the University of Glasgow, said: “Currently in the overall Scottish market many households can’t afford to buy their ‘next step’ and builders can’t afford to build.” The representative body of the Scottish housebuilding sector stressed that the lack of new homes being built posed a “fundamental” challenge, impacting affordability across both ownership and rental markets. There are also deepening concerns regarding the Aberdeen housing market, where there has been a 29 per cent decline in the median house price over the past decade.

While some agents in the city have expressed optimism that the UK government’s approval of the Jackdaw North Sea gas field will bolster confidence, some experts said there remained a need for longer-term solutions. Read more: Housing associations should be treated as critical economic infrastructure, say top economists “Aberdeen has been in quite a long process of adjustment to the decline of the oil industry, and I don’t think Jackdaw will make much difference to that,” said Glenn Bramley, professor of urban studies at Heriot-Watt University.

Questions have also been raised around the likely impact - or lack of it - stemming from Chancellor John Healey’s Budget, which set out plans for an England-only equity loan scheme for first-time buyers. Subscribe today to the Scotsman’s daily newsletter Susan Murray, director of the David Hume Institute, said the Budget underlined an “ongoing disconnect” between housing policy and economic policy. “The Chancellor’s headlines focus on capital allocations and targeted homeownership schemes in England,” she explained.

“The reality across Scotland is that housing continues to be treated as a social welfare cost rather than vital economic infrastructure.” Ms Murray said the Scottish government should “shift away” from treating housing investments “purely as spending liabilities,” and leverage the likes of housing associations as “key anchor institutions.” Mr Maclennan said: “Fixing Scotland's housing issues will require a much more serious reframing of how governments in London and Edinburgh, and at local levels, understand the housing system and how, in particular they tax it.

“Old politics and old silo governments won’t solve the problems. The civil service recognises this, our performative politics doesn’t.”