City Guide to Edinburgh, Scotland

City Guide to Edinburgh, Scotland

Edinburgh Residential Property Continues To Slide


By edg - Posted on 07 October 2008

The ESPC in Edinburgh

Edinburgh's residential property market continues to deteriorate, according to latest statistics from the ESPC for the third quarter of 2008. Compared to the period from July to August last year, the average property price in Edinburgh fell by 1.2%. Property prices have turned in the last two months, with a 6% annual price decline in August, the first drop in three and a half decades, and 7% fall in September. The average price of a house in Edinburgh has now fallen to £219,345.

The slump is most evident in the dearth of home sales completed across East
Central Scotland, with only 2,200 property sales recorded, a 57.6% drop on the same period last year.

Larger price falls of over 11% in East Lothian and Midlothian took the
average property price in these areas to £194,954 and £154,046
respectively.

West Lothian was the only major region in East Central Scotland to
report an annual increase with a modest rise of 2.5% taking the average
house price to £174,587.

"Up until the end of July, prices had been continuing to rise in the
Capital, and it is these July figures that have led to the relatively
modest annual fall of 1.2% in Edinburgh when looking at the third
quarter," said Ron Smith, chief executive of ESPC. "More recently though we have seen an annual decline of 6% in
Edinburgh in August and a 7% annual fall in September. As prices come
down we would expect to see some buyers attracted back to the market
resulting in the number of sales picking up slightly toward the end of
the year. However, tightened lending criteria will continue to exert a
downward pressure on demand, meaning active buyers who can secure
financing will be able to continue negotiating better deals for
themselves. We would therefore not expect to see the average price rise
again over the coming year."

One consolation Edinburgh's homeowners can take is that prices throughout the rest of the UK are falling harder, with the Nationwide recently reporting in September that an average UK house dropped annually in price by 12.4%.

Buyers offering less

Buyers have also taken advantage of the changing market conditions with a marked drop in the premiums being achieved on properties sold at Offers Over. During the 3rd quarter the average "Offers Over" home sold in Edinburgh went for 16.7% over the asking price, down from over 27% last year.

Similarly over 70% of buyers purchasing a home at Fixed Price were able to secure the property for less than the asking price, up from 37.5% in the 3rd quarter last year.

Ron Smith said: "Over the last two months in particular we have seen an acceptance
among vendors needing to secure a sale that they will need to reduce
their expectations in order to do so due to the reduced demand for
property. Buyers who can secure finance are taking advantage of this by
negotiating hard to purchase homes at lower prices."

Edinburgh properties bucking trend

With lending restrictions impacting those on higher incomes less severely, modest growth continued to be observed for larger three and four-bedroom properties in Edinburgh. A sharp 20% annual rise in the average price of a four-bedroom detached property was influenced by a fall of 6.5% being observed during the 3rd quarter of 2007 however. Over the two year period from Q3 2006 to Q3 2008 a more moderate rise of 13% was observed on these properties.

City centre drop

Among areas showing marked declines in these lastest ESPC statistics are all properties in the city centre, which are down 11.1% year on year to £239,049. Two bedroom flats in Marchmont/Bruntsfield are down 6.2% to £253,979, 1 bedroom flats in Gorgie/Dalry are down 9.3% to £114,549, 1 bedroom flats in Leith Walk/Easter Road are down 7.9% to £117,154 and 2 bedroom flats in Stockbridge/Comely Bank are down 6.2% to £251,011.

More of the same

Lesley Canavan, of ESPC Money Management concluded: “These latest figures demonstrate that market conditions have dampened demand for property significantly. This has left those who are in a position to secure finance in a strong position to take advantage by haggling sellers down on price. Both buyers and sellers should be aware that the current conditions are not a short term phenomenon and are likely to continue throughout 2009. It would be prudent for those looking to take advantage of the market to consider what is affordable to them when looking for a mortgage rather than seeking to maximise the amount that they can borrow."