The Scottish housing market has suffered a severe downturn with the number of loans taken out by homebuyers falling by more than a third in a year. The figures appear to contradict comments made recently by Alex Salmond, the First Minister, who described the market as “relatively stable”.

There were almost 10,000 fewer people who obtained loans to buy a home between April and June this year compared with the same period last year - representing a drop of 34 per cent.

The statistics released yesterday by the Council for Mortgage Lenders (CML) provide strong evidence that the credit crunch has had a significant effect on the housing market north of the Border, adding weight to the claim made yesterday in The Times by Michael Luck, a leading estate agent, that Scotland had been more badly hit than industry and government were prepared to admit.

However, the decrease in mortgages taken up has not been as severe as it has been in the rest of the UK, which has had a reduction of 46 per cent.

There were only 18,500 loans recorded in Scotland for the second quarter of this year, down from 28,200 for the same period last year.

The statistics also reveal the extent of the problems facing first time buyers in Scotland. Only 6,600 people managed to get on to the property ladder this spring, a reduction of 31 per cent. Those who were successful in securing money to buy a home amid tighter lending restrictions had, on average, a deposit of 13 per cent compared with 10 per cent for first-time buyers at the same time last year.

Crawford McCaughie, CML Scotland chairman and senior lending manager at Dunfermline Building Society, said: “The mortgage market is clearly in a period of decline across the UK as a result of the shortage of mortgage funding and softening borrower demand. But the slowdown is less pronounced in Scotland.”

A big reduction in the number of loans being acquired provides a strong indication that thousands fewer homes are being sold as the vast majority of purchasers in Scotland need to take out mortgages.

The data emerged after Mr Luck clashed with Mr Salmond over the scale of the problem affecting Scotland's housing market. The First Minister was accused by Mr Luck of “talking patronising nonsense” by suggesting that house prices in Scotland were “relatively stable” and had risen 2.9 per cent since the start of the year.

Mr Luck, the managing director of Slater Hogg & Howison, told the Times that Scotland has followed the same trend as England, adding: “There is a crazy mood among housing professionals and others that the public in some way can be convinced of the opposite of what is really going on.”

Alison Hatrick of the National Association of Estate Agents (NAEA) said the new statistics were part of a more complex picture. “There is a lot of stock on the market and not so many buyers around so that is obviously not good news, but there has been a reversal in the trend to buy first and sell later,” she said.

“People are putting their homes up for sale first and that means they can afford to sit it out so we are not necessarily seeing big price drops because people are not prepared to agree to that.”

Mrs Hatrick also called on the Scottish government to take more action to revive the housing market after the gloomy figures. “The £2,000 grant for first-time buyers - which they withdrew - would have helped the situation, the measures they are taking do not suit the market as a whole.”

A spokesman for Mr Salmond said that the figures backed up his assertion that the Scottish market was more resiliant than the rest of the UK, but added: “We are not being complacent and that is why we are taking the measures we are.”

The Scottish government has announced £25million package to help homeowners facing repossession by extending the existing mortgage-to-rent scheme as well as encouraging shared equity schemes.

Some industry experts claim that the reason Scotland is coping with the housing downturn better than other parts of the UK is because prices tend not to be as inflated and the borrowing-to-income ratios are not as high in Scotland. The average house price in Scotland in May was £167,126, compared with an average UK house price of £218,151.

The CML report also showed that the recent loans taken out by Scots represented an average of 2.88 times their income, compared with 3.12 across the UK.

Jonathan Fair, chief executive of Homes for Scotland, the organisation representing the home building industry, pointed out that the number of loans for the second quarter was up 18per cent on the first three months of the year. “The house-building industry continues to face an immensely challenging period,” he said. “However, consumers should take confidence from the message that our overall housing market continues to be more resilient.”

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