As builders offer housing associations unsold stock at record levels, first-time buyers continue to struggle. Rachelle Money reports

Angela McLuskie's struggle to get on the property ladder as a first-time buyer epitomises what is now being described as the worst housing market in decades. For 18 months she has been looking for her own flat in Dumfries, but the 28-year-old is fighting against the tide of high interest rates, a distinct lack of 100% mortgages and recent hikes in the cost of living.

But out of the doom and gloom surrounding the housing market a golden opportunity has arisen. Property developers and construction companies are asking local housing associations to buy up their sites on an unprecedented scale, leaving many hopeful that Scotland will restore the affordable housing stock.

McLuskie has been forced to move back with her parents and take on a second job in order to save up for a deposit. "The biggest hurdle is that I can't afford the monthly repayments," she said. "I would be setting myself up to fail because I need to pay my mortgage, run my car, pay the bills and pay council tax.

"Now I need to get a substantial deposit of at least £10,000 before I start seriously looking again."

The Scottish Federation of Housing Associations (SFHA) surveyed its 160 members asking if they had recently been approached by developers to buy housing stock and sites. From the 42 responses received so far, 40 housing associations across Scotland have been approached by one or more developers.

Maureen Watson, SFHA's good practice team leader, said that in her 22 years' experience in the housing sector, she had never seen anything like the current situation.

"Even in the 1990s when interest rates were incredibly high, nothing like this happened," she said.

"Anecdotally we thought it was something that was spreading, but I have been astonished by the results we have got so far. It's all over the country. Houses just aren't selling - some (developers) are saying there's 160 units on this site and we're only going to be able to sell 40 of them."

Watson said it was too early to say how many properties were being offered to housing associations, and warned that not all of the sites would be suitable for affordable housing.

The statistics will be collated and presented to the Scottish government later this month in a bid to gain support for those housing associations which want to pursue a purchase.

One of the UK's major housebuilders, George Wimpey, confirmed it had "made some approaches" to housing associations in Scotland but nothing had been concluded.

David Marshall, business analyst for Edinburgh Solicitors Property Centre, said developers were becoming more inventive in their attempts to sell their properties.

"We are now seeing sellers offering cashback, with one giving £50,000 on their property. We had one property with a duck pond and part of the sale was the ducks to go with it. We have had developers offer other incentives like paying for food bills, Sky+ for a year or gym membership."

In May the Scottish government pledged £1.5 billion towards building 21,500 affordable homes by 2011, in a bid to claw back some 440,000 homes lost through the Right to Buy scheme. Since the announcement, 15,000 jobs have been lost in the building sector because of the credit crunch.

Allan Lundmark, director of planning for Homes for Scotland, the body that represents most of the country's housebuilders, said this was the worst housing recession in decades.

"We've been through housing recessions before in the 1980s and 1990s, but in the early 1970s the housing industry was all but decimated. This is far deeper than that," he said.

Signs of relief for the property market came two weeks ago when chancellor Alistair Darling raised buyers' hopes of a stamp duty holiday after calls from housebuilders for immediate intervention, a hope that was later dashed.

On Friday, builders began taking matters into their own hands. Glasgow-based Mactaggart & Mickel led the charge to revitalise the housing market by saying it would pay the stamp duty on all new homes sold at its 15 developments.

Ed Monaghan, the company's managing director, said: "The chancellor created an expectation among home buyers that stamp duty would disappear. We have had a deluge of customers asking us when this was going to happen. As a result, we have decided to help our buyers by removing this hurdle."

UK developer Gladedale, with around two dozen developments in Scotland, is doing the same.

Currently, stamp duty kicks in on all house sales over £125,000, with a 1% charge levied on the buyer. This increases to 3% on sales over £250,000 and 4% on sales over £500,000. Latest figures show the average cost of a home in Scotland has risen to over £171,000, meaning that Mactaggart & Mickel's current offer would save the average buyer more than £1700.

It was also hoped the chancellor would consider setting up a tax-free savings mechanism to make it easier for first-time buyers to save for a deposit. Pressure was mounting on the Treasury to take urgent action as new figures on the number of homes repossessed were released. In the first half of 2008, 18,900 homes in the UK were repossessed, up 48% since the same time last year.

Graeme Brown, director of Shelter Scotland, the housing and homelessness charity, said the Scottish government should take advantage of the current situation. "If the market changes bring affordability and more opportunities for people to have a home, from our point of view that has to be a good thing," he said.

"The Scottish government can bring forward some of the money it is investing over three years to get these kind of schemes going now."

A Scottish government spokesman said: "To boost the housing sector in Scotland, we are already investing more than £1.5bn in housing over the next three years.

"We recently announced a package of measures that will support both homeowners and those seeking to buy, including the £250m extension of our Low-cost Initiative for First Time Buyers (Lift) and £25m funding for the new Homeowners Support Fund, which will help those at risk of losing their property."