HBOS says that the number of property sales this year will be 45 per cent lower than last year and predicts that average prices will fall by nine per cent.  But the bank also unveiled figures which showed that the number of homeowners in arrears on their mortgage remains remarkably low.

The forecast that the number sales will fall by nearly half this year is largely a reflection of conditions south of the border.  Recent data from the Council of Mortgage lenders (CML) showed that the decline in the number of mortgages approved in Scotland was half the level seen in England and Wales.  Given that mortgage approvals closely track the number of sales, that would suggest that Scotland will see around 20 per cent fewer transactions this year compared to 2007.

But the trading statement to the London Stock Exchange also revealed that number of HBOS customers in arrears on debt repayments remained subdued.  The proportion of customers in arrears last month, at 1.89 per cent, was higher than at the end of 2007 (1.67 per cent), but pretty much the same as it was at the end of 2006 (1.91 per cent) and lower than it was at the end of 2005 (2.11 per cent).  Mortgage arrears had also risen slightly, from 1.67 per cent at the start of the year to 1.89 per cent today, but HBOS says that the figure remains in line with predictions at the start of this year.

The repossession figures are important because they reflect the number of homeowners who may have no choice but to sell their home.  In slow market conditions, sellers who are financially secure are less likely to accept low offers for their home, helping to support average prices.  A significant rise in the number of ‘distress' sales, however, would increase the number of homes on the market where the seller may have to sell at almost any price.