Edinburgh House Prices To Be "Broadly Unchanged" In 2010 After 2009 Rise
Edinburgh's housing market ended 2009 in better health than a year ago, according to the ESPC's report for the last quarter of 2009, with the average house price up from £193,354 to £218,043, an annual increase of 12.8%. The average house price in Edinburgh has now increased annually during each of the last five months of 2009, reflecting a trend seen across the UK.
At the end of 2009, the Nationwide House Price Index put the average UK home up 3.5% annually to £162,116 and the Halifax House Price Index recorded a 1.1% annual rise in the average UK home price to £169,042.
The ESPC cautioned that the 12.8% rate of increase was inflated due to a rise in the proportion of larger homes selling. The annual comparison is also against market lows recorded at the depths of the credit crunch last year. By comparison with the ESPC figures, the Nationwide HPI recorded Edinburgh home prices up 1% year on year to £246,609 and up 125% in the last decade.
“There has been clear improvement in market conditions over recent months, but it is still important to put these headline rises – particularly the large increase in the average house price - in perspective,” said David Marshall, business analyst with ESPC.
“In the first instance, there has been an increase in the proportion of larger properties selling. There has been a rise in the number of homes sold across the board, but the upper end of the market has shown swifter improvement.”
Over 1,300 homes were sold in Edinburgh between October and December in 2009 – a 57% rise on the 825 sales that were completed during the same period in 2008.
More Fixed Price properties achieved the asking price during Q4 2009 - 45% compared with 26% in Q4 2008.
“Three and four-bedroom properties accounted for 28% of sales in the fourth quarter of 2008. This year that figure rose to 32%. More large properties selling helps push the overall average upwards. It's also worth remembering that the annual rises we are seeing now bear comparison with the low values recorded at the end of 2008. With that said, the market has improved for sellers, particularly over the last six months. The improvement continues to be slow and steady at this stage and people should not expect a return to rapid house price rises.”
Bigger does better
Home buyers who took advantage of the historic, rock-bottom interest rates over the last year to buy larger homes in Edinburgh and Lothians have fared well.
Within Edinburgh, the average price of a three-bedroom semi-detached property rose by 7.6% annually (from £228,261 to £245,496) and 4.9% for a four-bedroom detached house in the suburbs (£379,000 to £397,500).
Smaller properties generally fared less well, with the ESPC report showing the average year-on-year price of a one-bedroom flat in Leith and Easter Road down 4.3% (from £114,567 to £109,584) and a 2-bedroom in Stockbridge/Comely Bank down 2.3% (from £245,909 to £240,204).
David Marshall explained: “In a market where prices are static or growing at a low rate, typically you will see in any given period some areas where larger growth is observed being offset by falls in other areas. In this case the upper end of the market has definitely shown greater improvement to this point, with the impact of tighter lending criteria generally being less marked for buyers.”
Similar trends beyond Edinburgh
Outwith Edinburgh the ESPC saw a similar pattern of large increases fuelled by increasing sales of larger properties, with "an underlying trend of incremental improvement underpinned by steadily rising buyer demand."
The average house prices in East Lothian and West Lothian rose by 13.6% and 14.5% respectively, whilst a more modest increase of 2.7% was observed in Midlothian taking the average price of a home sold in the region to £164,348.
In Dunfermline a 5.9% increase took the average house price to just over £130,000 meaning prices in the town are now 15% below the peak levels witnessed in 2007.
“Broadly unchanged” in 2010
The ESPC is forecasting that home values in Edinburgh will remain flat over the course of 2010.
David Marshall concluded: “On one hand, we are likely to see a continuation of increasing demand from buyers as lending restrictions are eased somewhat and confidence continues to return to the market. Offsetting this however is the prospect of a rise in unemployment during 2010 coupled with the likelihood of an increase in interest rates over the medium term. There will be some fluctuation from month-to-month, but broadly speaking the outlook is that homes values will be broadly unchanged over the next 12 months as compared to 2009 levels.”