Worrying estate of affairs as credit crunch takes toll on country piles

SCOTLAND'S country piles were once regarded as fortresses that stood impervious to the pressures of the housing market.

But now estate agents are warning that, after initially holding up well, prime country property prices are facing a sharp downturn on the back of bleak forecasts from mortgage lenders.

Property group Savills has started advising clients who want a quick sale to set more "realistic" asking prices when they sell up.

Jamie Macnab, director of country houses for the firm's Edinburgh office, is predicting that in the worst case scenario its prime portfolio will see a 15 per cent dip in average property prices.

This equates to a drop from around £710,000 to just over £600,000 by next year.

Market recovery to current levels is not expected until at least 2012, Mr Macnab told The Scotsman.

"The market has been slower in the first half of this year," he said.

"All buyers have been a bit more cautious.

"I don't think anyone should buy a prime home this year if they are planning to sell it next year, because it is probably not going to be the best one-year investment."

He said the slump could be a lot less than the 15 per cent extreme – although it would still likely be between 5 or 10 per cent.

Liam Bailey, head of residential research at property consultants Knight Frank, said: "The weaker market conditions in 2008 mean that sales volumes are down sharply on 2007.

"We anticipate that sales across the market will be around 25 per cent this year compared to their historic average.

"This points to the real need for vendors who want to sell their property in a reasonable timeframe making sure that their asking price is realistic – and for most properties this means accepting that you will achieve a lower price now than you would have done six months ago."

Savills has also reported a 45 per cent drop in sales of luxury homes in London sales.

Only properties at the very top end of the property market, with values exceeding £5 million, are proving "relatively immune" to the downturn.

Savills shares fell by 10 per cent yesterday – and the company announced a "meaningful number" of redundancies in an effort to cut costs.

Meanwhile, a Nationwide survey has shown the number of people who believe now is a good time to buy a house is at its highest for a year because of the credit crunch.

Of 1,000 people asked, 18 per cent thought it was an opportune time, the highest level since July 2007.

A spokesman for the building society said: "Consumers may start thinking it is a good time to get a discount in the buyers' market and expectations about house-price growth improved very slightly from May."

Grand designs, but diminishing pricetags

IT WAS built in 1677 for the first Thane of Cawdor and a whole village was cleared so the laird could enjoy uninterrupted views of Loch Indaal.

Margaret Thatcher reportedly held her war cabinet there and now it is owned by a man who helped to train pilots for Ugandan dictator Idi Amin.

But today, Islay House, near Bridgend on the Inner Hebridean island of Islay, is worth £500,000 less than it was a year ago because of the credit crunch.

Despite its 28 acres, five reception rooms, a ballroom, 24 bedrooms and nine bathrooms, the owner, Tom Friedrich, has cut the asking price from offers over £2.25 million to £1.75 million.

Jamie Macnab, the director of country houses for Savills of Edinburgh, which is selling the property, said: "The house is just not shifting so now our client has instructed us to reduce the price."

Morrington House, by Dumfries, is a beautifully restored country house.

The ground floor boasts a drawing room, morning room, dining room, library, sunroom, conservatory, kitchen, laundry and stores.

Upstairs, there are seven bedrooms.

"We had it at offers over £950,000 or £975,000 but now it's dropped down to £890,000," said Mr Macnab.

"It's the classic scenario – our client had two good offers both well over £1 million last year and he turned them both down because he thought we were in a rising market. Then the market turned against us so we recommended that he reduces his price to get the sale through."