Slump offers a step on to the property ladder

IT IS a rare shaft of sunlight amid widespread economic gloom. Housing experts say falling prices have led to a range of bargains on the market for first-time buyers while the Government's multi-billion-pound bail-out for banks is starting to make it easier to get a mortgage.

A total of 23,422 loans for house purchases in the UK were approved during September, 10% more than in August, when numbers sank to a record low.

And the National Association of Estate Agents says the proportion of first-time buyers on its books has increased from 8.3% to 9.5% during the same period.

Experts also say there is little to be gained by waiting for property prices to drop any further because the delay between starting the process and closing the deal could mean anyone who waits finds prices have started to go back up.

Leslie Deans, senior partner of Leslie Deans and Co, a member of the Edinburgh Lothians Property Group (ELPG) of estate agents, said: "Things are now considerably better (than they were six weeks ago]. Liquidity and the flow of funds has improved and it is a lot easier for people to get mortgages. There are a lot more deals around than there were.

"Although the days of 100% mortgages are gone, more lenders are back to offering 90% mortgages. Also, the bank base rate dropped in September and is virtually certain to drop again in November.

"Next year, it could drop as low as 2% so mortgages should become cheaper. So this is an excellent situation for first-time buyers. A year ago I would have advised them to prepare to be disappointed as there were more buyers than sellers and not everyone could be successful.

"Now you would almost expect to get a property you are interested in and for less than you expected."

Deans added that this was good news for the future of the housing market as a whole.

With the squeeze on mortgages, there have been fewer buyers in the market. Less competition has led to a rapid slowdown in price inflation which has led to falls of an average 10% in value across Scotland since the beginning of the year.

This has led to more bargains, especially at the lower ends of the market populated by first-time buyers. Many owners of existing properties are being forced to lower their prices – 70% of properties marketed at a fixed price are not achieving even the fixed price.

David Alves, sales manager for Sturrock Armstrong Thomson, said: "There are some very good buys around. Prices have dipped by 10% since the start of the year, interest rates are dropping and are expected to fall significantly again by the summer when prices should have hollowed out. You should be able to negotiate down even fixed prices at the moment."

Builders of new one and two-bedroom flats are also offering unprecedented incentives because of the abundance of such properties, many conceived and constructed during the boom period, on the market.

Companies such as Miller Homes and Bryant are enticing first-time buyers with offers of properties on which they only have to pay 75% of the purchase price now and the rest up to 10 years later. On some apartments, Bryant is offering to pay household bills up to £1,000 a month if owners move in before the end of the year.

Mark Hordern, marketing manager of the Glasgow Solicitors Property Centre, said many were in city centre locations which were prime territory for first-time buyers.

"People were putting their homes on the market before putting in an offer on a property themselves. If those homes have not sold they are having to moderate their expectations so prices can be lower than they were.

"Also, builders of new homes have a lot of one or two-bedroom flats for sale and they are having to use a huge range of incentives to get buyers. If a first-time buyer can get a mortgage then it is an extremely good time to buy."

How easy is it to get a mortgage?

As house prices drop, getting on the housing ladder finally seems like a reality for young buyers who have been baulking at the soaring price of property for years.

I found a one-bedroom flat in Liberton that my boyfriend and I could afford on our combined salaries, at a fixed price of £125,000.

A broker at FirstMortgage said I needed a 10% deposit for a property within three times our salaries. Gone are the days of 95% or even 100% mortgages, but plenty of building societies would give me a safe deal at 90%.

Godirect.co.uk gave me an online quote with Ecology for a variable mortgage at 6.45%.

Case study

One first-time buyer, Lynsey McVey, 21, moved into her new flat in the Meadowbank area of Edinburgh on Friday, and is already giving it a makeover.

"I have been looking for a few months and decided to go for it when I found a property I really liked," she said. "I was able to get a 90% mortgage and mum and dad helped me with the 10% deposit.

"It's in your favour that there is less competition at the moment. I offered just over the asking price and I got it. And hopefully when interest rates go down I will be able to remortgage to an even better deal."

"At the moment it just feels really good to own my own home even if it is a little bit scary."