ESPC 2010 Q4: Edinburgh House Prices Down 2%

Submitted by edg on Mon, 10 Jan '11 10.43pm

Figures from the Edinburgh Solicitor and Property Centre (ESPC), for the fourth quarter of 2010, reveal that  the average house price in Edinburgh has dropped 2%, from £218,043 to £213,685.

It is the first time since the third quarter of 2009 that the ESPC has recorded an annual fall in the average house price in Edinburgh.

The number of sales recorded in Edinburgh also showed a decline – down 13.2%, from 1,301 in the fourth quarter of 2009 to 1,129 in 2010.

Some properties falling faster

Within the city most areas saw falls of between two and five per cent. A 3.5% drop took the average price of a one-bedroom flat in Leith Walk and Easter Road to £105,706 while the average price of a four-bedroom detached house in Edinburgh's suburbs stood at £379,990 following a decline of 4.4%.

The average price of a one-bedroom flat in Gorgie and Dalry dropped below £100,000 for the first time since the fourth quarter of 2005, after a 7% fall fall from £107,271 in Q4 2009 to £99,677 to Q4 2010.

Two-bedroom flats in Stockbridge/Comely Bank fell 12.6% from £240,204 to £210,004.

David Marshall, business analyst with ESPC, commented: “Earlier in 2010, although the overall average house price in Edinburgh was still rising there was a clear difference in trends in different markets within the city. The value of larger family homes was rising while smaller starter homes were seeing values decline."

"The reality is that for much of the last year we have seen supply consistently exceed demand and this is now starting to be reflected in the results across the board. It is likely to remain a buyers'  market throughout 2011 and although significant falls are unlikely we expect to see prices ease back further in coming months before levelling off in the second half of the year.”

Regional View

A 5.6% drop took the average house price in East Lothian to £198,991 – the first time the average had dipped below £200,000 since the second quarter of 2009. A sharper fall of 9.7% was recorded in West Lothian, although this followed a 14.5% rise in late 2009 with prices in the area still higher than two years previous.

Meanwhile, in Dunfermline a year-on-year fall of 4.2% took the average house price to £125,000. Midlothian was the only area to see an annual increase with a 2.4% rise bringing the average to £168,345.

The ESPC report reflects a wider trend of gradually falling house prices in Scotland and throughout the UK. The Nationwide recently reported house price falls of 2% for the average Scottish house to £137,491 in Q4 2010. The Nationwide report put the average UK house price at £163,244.

Sales down

The number of homes sold across East Central Scotland during the fourth quarter of 2010 was lower than during the same period in 2009. ESPC recorded a total of 1,655 from October to December – down from 1,899 the previous year. This marked the first annual fall in sales since the third quarter of 2009.

David Marshall said much of the house price growth seen in early 2010 reflected the fact that sales of larger, family homes made up a greater proportion of the overall figures than in previous years.

"Demand for smaller properties was well below what would be considered normal levels, with first-time buyers still facing difficulties in securing mortgages and activity amongst buy-to-let investors still low," said Marshall.

"Ultimately no area of the market can operate in complete isolation so the difficulties towards the lower end of the property market naturally have a knock-on effect further up the ladder. The number of homes available for sale is higher than would normally be seen at this time of year while the number of active buyers is still comparatively low so the market is definitely tougher for sellers than it was twelve months ago."

Housing market in 2011

To a large extent future house prices are dependent on what the Bank of England will choose to do with interest rates. Interest rates have remained unchanged at a historic low of 0.5% since March 2009. But with inflation expected to stay stubornly high - latest CPI is 3.3% and RPI is 4.7% - the BoE has intimated that rates will go up this year. Even with modest rises banks and building societies are expected to continue to tighten their lending criteria.

"Continued low interest rates mean the number of distressed sales should remain relatively small which makes more significant falls unlikely and prices should level off later in the year. With that said, the balance of power in the market is likely to remain in favour of the buyer for much of 2011,” says Marshall.

ESPC Edinburgh House Price Changes in Q4 2010 (compared to Q4 2009)

  • Average Edinburgh house price: £213,685 (£218,043) DOWN 2%
  • Edinburgh Sales Volume 1,129 (1,301) DOWN 13.2%
  • Total Sales Value all Edinburgh houses £241.2m (£283.7m) DOWN 15.0%