City Guide to Edinburgh, Scotland

City Guide to Edinburgh, Scotland

Edinburgh Home Prices "Stable" In Shrinking Market

By edg - Posted on 08 April 2009

The ESPC in Edinburgh

The average Edinburgh house price has fallen by 6.8% annually in the first three months of 2009, according to statistics released today by the ESPC. In the East Central Scotland region the fall was 7.2%

The average price of a home in Edinburgh is now £195,895. For the month of March alone, the average house price was £194,683, a year-on-year decrease of 12.6%.

For the region, the average selling price of a property is now £180,545.

By way of comparison, the Halifax House Price Index saw the average U.K. house price fall annually by 17.5% to £157,326 in the first three months of 2009, while the Nationwide recorded a fall of 16.5% to £149,709.

The ESPC also reported sales volumes down by almost half from 1606 to 818, with more sellers and buyers waiting on the sidelines. There was 70% fewer properties coming onto the market compared to last year's mid-summer peak when the number of active properties was approximately 6,000 compared to the current level of 4,500.

Prices finding a floor?

Monthly and quarterly figures continue to show year-on-year falls in house prices, but Ron Smith, ESPC chief executive remains guardedly optimistic about the direction of the market.

"It's important to note that the average house price has remained stable over the last six months," said Smith. "In Edinburgh, this has seen the average figure sit somewhere between £192,000 and £200,000. Buyers are continuing to benefit from their stronger position as only 1 in 5 properties is achieving its fixed price and the average premium on offers over has come down from 19.6% to 3.3%. This buyer's market is also showing signs of getting busier as month on month we have seen an increase in the number of properties selling."

"During 2008, we saw a significant increase in the properties which were actively being marketed for sale making it difficult to find a buyer. In response to this, fewer homeowners are choosing to enter the property market at the moment, preferring to stick where they are unless other events, such as a growing family or relocating for work, start to come into play. The impact of this is that a smaller market, with fewer buyers and sellers, has the potential to provide additional support to average prices. If supply remains constrained it is likely we will see a decline in the bargaining position of the buyer."

Property group the ELPG, which consists of Warners, Neilsons, Drummond Miller, the Lints Partnership and Leslie Deans & Co, also put out an upbeat statement today reporting more than 40 property sales through its Spring Sales initiative, with a total value worth in excess of £6.5 million.

Under the initiative, launched earlier this year, prospective buyers
can compare reduced house values with the previous prices set for the
properties last year.

Home Reports

In recent months, the property market has been lent strong support
from the Bank of England's aggressive interest rate policy cutting rates from 5% in October last year to just 0.5% last month, the lowest
level in 315 years.

Among other initiatives aimed at propping up the property market,
the government introduced a stamp duty holiday on properties bought
under £175,000 until September 2009.

The introduction of Home Reports
on 1st December also appears to be stimulating buyer interest. By law, property
sellers must now prepare a Home Report detailing the condition, the
valuation and the energy efficiency of the house. Last month, the Royal
Institute of Chartered Surveyors
said the reports were having a
positive impact, but Robin Stimpson, ESPC chairman, said it was too early to draw conclusions here.

"This is the first quarter where Home Reports have been a requirement throughout. However, at this stage it is too early to say whether the properties with a Home Report are selling any quicker," said Stimpson.

"Anecdotal evidence is that for some homeowners the Home Report has discouraged them from testing the market in view of the cost that will be incurred, while those who have bought a Home Report have sought to use it to their advantage. For those properties which sell within 3 months, the buyer has access to a document that most banks will accept as the survey rather than incur the additional expense of refreshing the single survey."

Some sample price drops

In a limited sample of Edinburgh properties, brackets that have depreciated significantly since a year ago include Gorgie/Dalry one-bedroom flats, down 17.9% from £127,213 to £104,418; Stockbridge/Comely Bank 2 bedroom flats down 18.6% from £253,953 to £206,830; suburban 3 bedroom semis down 19.9% from £255,569 to £204,782; and Marchmont/Bruntsfield 2 bedroom flats down 14.6% from £260,078 to £222,088.