What we need to keep in mind however, that despite the drop in prices post 2007, over all - house prices do go up!
If we step back and look at the graph over time and take a medium to long term view on the investment, house prices in Scotland rise. There have always been blips caused by a variety of factors but these are temporary and do not undermine the general trend.
We all learnt in school about the Economic Curve and the laws of supply and demand, and as far as residential property is concerned, it is no different than any other commodity.
So lets look at some of the factors involved:
Firstly, we have an ever expanding population in Scotland as a result of more births, immigration and as highlighted regularly in the press, everyone is living longer. This factor alone increases demand but also by default, reduces supply. More people, fewer houses.Historically people stayed at home until they got married, but now of course it is not uncommon for a couple who have both left home and bought flats to come together and buy another property as a family home to live in. The other properties are retained as investments. Two more properties lost to the supply side of the equation.
Families are smaller and living in larger homes - they are no longer supplying accommodation for the live in staff as would have traditionally been the case in larger homes. A large Edinburgh town house that once would have housed ten, now houses four.
There have been a variety of studies and reports all indicating that in the UK, we are not building enough new homes to meet demand: Planning restrictions, green belt issues and a finite area of land to develop, along with cash flow and financing issues, creates restrictions on developer's ability to keep up with the ever increasing needs of the population.
The recession has created a separate demand from the investor and a demand that changes with the market. As the recession hits and interest rates available from other investments decline, owner occupiers cannot enter the market, thus we hit our blip and property becomes interesting again.
There is multi tier activity here. As it becomes difficult for individuals to buy, they start to rent. We are back to our supply and demand curve and we see an increased demand on available properties to lease, as the rents are pushed up. We now have lower investment prices for higher yields, so inevitably we see the investor raising the demand side of our equation again.
General inflation has to be a factor that cannot be ignored. Despite pay freezes, cuts and job losses, pay has increased over the last 10 years and earnings will hopefully increase again in the future. As pay increases, ultimately people will pay more for their property.
Finally, that while mortgage lending is still tight compared with the giddy heights of the early 2000's, they are better than when many of my generation and older set out on the market trail. In some cases you could only borrow if you had kept an account for a period of time with that lender, and interest rates were at a level considerably higher than they are currently. Deposit levels can be an issue, however I believe some of your own money invested in bricks and mortar is a positive step.
All these factors can take time to play their individual parts in moulding the residential property market. With careful investment and borrowing in conjunction with taking a medium to long term view on that investment, property will continue to be a good bet.