House prices are now six times the salary of the average Scot, according to new government figures revealed yesterday.
The statistics show that the average house price of £137,192 is running out of reach of the £22,261 median salary.
Shock waves from the deepening crisis south of the border, capped by the collapse of the Northern Rock building society, are now impacting across Scotland, particularly in Glasgow, Edinburgh and Aberdeen.
First-time buyers with little or no savings are being faced with debilitating interest rates as the industry recoils, and many young people can't buy without parents' help.
Last night lenders came under criticism for previously having artificially raised prices by offering mortgages of up to five and, in certain cases, six times a borrower's salary in recent years.
The government was also criticised for failing to intervene as lenders increased the amounts of mortgages offered.
Don Fleming, of the Mortgage Advice Network, said that price rises are expected to slow down in coming years but this did not help those searching for a home now. He said: "Everyone (in the industry) is soft pedalling as much as they can so as not to admit that they are in crisis. Certainly the froth is coming off the market. But it will pan out into increased affordability and in the longer term that is a good thing."
He said in one instance a lender was offered a 95% mortgage and as soon as the papers were signed a further 30% loan was offered as a top-up because the person was then classed as a property owner.
He said: "Lenders were calling it flexibility, but what they mean is they are pulling the wool over society's eyes. Government should have stepped in to stop people receiving large unsecured loans."
The pressure on those with low incomes was highlighted by one case where a couple with a joint income of £26,000 were paying £700 a month in mortgage repayments.
Scott Brown, of property solicitors Warners, said more families were being forced to help their offspring on to the market. But he added: "First- time buyers should be reassured that prices aren't likely to rise dramatically which will help them get that first step."
Jamie Hepburn, SNP MSP for Central Scotland, who obtained the government figures in a parliamentary question, said: "People are spending a lot of money a month as a proportion of their take home pay." He said right to buy led to a disincentive for local authorities to build new homes and that he was pushing for that to change.
I have had to ask my parents for help'
Marketing specialist Emma Watson is a graduate and earns a good salary but can't get her foot on the first rung of the housing ladder.
She has been forced to move back home with her parents because she can't afford to buy her own property. The 29-year-old from Edinburgh said: "It is stressful. I'm looking for a mortgage by myself, but I have had to ask my parents for help. The mortgage I am looking at would cost £580 a month, but once you put your council tax and other expenses on top you are talking about £800 at least."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article