As Alasdair Seaton of surveyors DM Hall explains: “There are no 125% mortgages now and no capacity for borrowing massive salary multiples. The market is now funded with 90% mortgages and borrowing based on multiples of three times a buyer’s earnings. Prices have to fall until the money supply issues correct themselves.

“Currently nobody knows where the midpoint between unsatisfied active demand, appropriate lending and realistic seller expectations lie, but where there is oversupply prices probably need to be reduced by 10%-15%.”

Lenders are looking to earn from individual mortgages again rather than through the volume of their mortgage business and it looks like a more stable, more sustainable model long term. Even a small adjustment in the lending criteria would be good news for first-time buyers as prices look to be falling back in line with wage inflation. That would create good opportunities for both buyers and sellers.

Seaton says those faced with forced sales or who have bought at peak prices in the past two years are looking at anything other than a soft landing. Indeed a first-time buyer who bought an overpriced flat at the peak of the market (2006) will probably have to stay put for another two years to be able to recoup their initial investment.

However, 90% of people live in homes they bought five or more years ago and will be looking at a return on investment of at least 50%. HBOS claims the average house price in Fife has risen by 91% since 2003 and 191% (over £100,000) in the past decade.

Parental guarantors are less forthcoming than previously but opportunities are there. In Dunfermline, for example, there is a two-tier mid-market comprising part parent-funded, first-time buyer flats. There are also deals to be had on three-bed, detached new-builds and investor-oriented flats which have fallen in value from £100,000 to £90,000 at the same time as rents have risen by £25 per calendar month. If you can get funds together, there are deals available for those able to make clean, uncomplicated offers.

In the affluent East Neuk “nothing is happening”, according to St Andrews’ agent John Bradburne. He says: “Our market is not price-sensitive, it is confidence-sensitive and potential buyers have been scared away by the adverse media coverage. The scare stories have become a self-fulfilling prophesy.”

Bradburne says the difficult lending conditions have led to a significant number of deals being scuppered when funding falls through.

He adds that, as in other premier markets, sellers are prepared to lower their asking prices as long as deals are conducted privately and off the market.

“St Andrews, Elie, Largo and the Tay coast are all OK,” he says, “but everything else is terrible. There are not enough deals being done but people can’t hold off moving indefinitely so the good options for buyers currently might prove ultimatelt to be a very small window. With any positive signs I can see the market kicking off again.”

If you are the proud owner of a coastal cottage, prime rural or hotspot property, there is nothing to worry about. However, if you have pitched up in a big modern estate of new-builds, 1930s council houses or a dowdy 1980s-vintage home then don’t book the removal vans anytime soon. Your best option is to stay put in anticipation of more favourable conditions. If you have to sell, expect to have to drop your price.

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