The Chancellor's announcement of a stamp duty "holiday" on properties under £175,000 comes at a significant juncture in Edinburgh's housing market. The Edinburgh Solicitors' Property Centre (ESPC) announced today that the average price of an Edinburgh property fell by 6.5% to £201,517 in August compared to a year ago. It is the first fall in decades.
The ESPC says that sales volumes were down by almost 60% year-on-year for the third consecutive month. Just 400 sales were completed in August, compared with 985 during the same month in 2007, a marked slowdown even accounting for the Beijing Olympics and the fact that it was the wettest August on record.
The slowdown in sales has led to an increase in the number of
properties for sale on the market. Currently there are around 3,400
homes advertised for sale in Edinburgh compared with just over 2,000 at
this time last year.
Commenting on the statistics for August Ron Smith, chief executive of ESPC said:
"These figures show that those sellers who wish to secure a sale are
now starting to accept the change in market conditions we have
witnessed over the last number of months. Most sellers are also in a
position where they are looking to purchase a new home, so they are
able to balance accepting a lower offer on their current property by
taking advantage of their stronger negotiating position when they come
to buy. The premiums people are having to pay on properties at offers
over are as low as they have been in the last decade."
The average premium paid over the asking price on properties sold at offers over fell to just 14.3%, down from over 27% in August 2007. Similarly, over 62% of those selling properties marketed at fixed price accepted an offer below the original asking price, up from less than 28% last year.
Smith added: "Typically it takes people much longer to respond to news that the market is cooling than it does for them to react to news of rising house prices, so the fact that we are already seeing evidence of this sort of change in behaviour is good news for the long term health of the market. The reality is that for the majority of homeowners, average house prices are all relative given that if the value of your current home rises, the value of your next home is also likely to have risen by a similar amount. It is the number of sales rather than the average house price that is of primary importance to the local economy."
"As affordability continues to improve in coming months, and with mortgage rates now returning to levels they were at in August 2007 we should start to see an increase in activity toward the end of the year particularly from first-time buyers who have been priced out of the market by recent rises in house prices and can also benefit from changes to the LIFT scheme set up by the Scottish Government."
Stamp duty holiday
Alistair Darling's surprise announcement
of a stamp duty holiday today means houses costing less than £175,000 will not incur the 1% tax. Stamp duty will be frozen on houses costing less than £175,000 from tomorrow for a year. It will save home buyers a
maximum of £1,750.