ESPC Edinburgh Market Review – July 2008
- Annual rise of 7.4% takes the average house price in Edinburgh to £245,415.
- Rise is inflated due to an increase in the proportion of larger family houses selling.
- Sales volumes continue to fall sharply due to restrictions in credit markets with the number of completed sales down by over 50% year-on-year.
- Evidence that vendors who need to sell are starting to adapt to new market conditions by lowering expectations on selling prices.
Latest figures released today by ESPC reveal annual house price inflation in July stood at 7.4% taking the average selling price in the Capital to £245,415.
The rate of increase was skewed by higher demand at the top end of the market which has resulted in larger family homes accounting for a higher proportion of sales than in previous years. When looking at the sale of like-for-like properties the rate of inflation was typically much lower reflecting the downturn in demand stemming from current conditions in the credit markets.
The average price of a one-bedroom flat for example rose by just 0.4% from £140,981 in July 2007 to £141,597 in July 2008, while a 1.3% rise took the average price of a two-bedroom flat in the Capital to £188,932. The higher level of demand for family housing was reflected by a 4.9% increase during the same period taking the average price of a three-bedroom home to £269,712.
Meanwhile the number of homes selling continued to be well below that seen in previous years with a lack of affordability and tightened lending criteria constraining demand. Just over 500 sales were completed in Edinburgh in July, some 56% below the number witnessed during the same period last year.
The number of properties available for sale on the market remains over 50% higher than in previous years, and with lower demand this continues to leave buyers in a much stronger negotiating position.
There are signs that sellers are now starting to adapt to this new reality by lowering their expectations on the selling price their property will achieve. The average premium over the asking price received on properties sold at offers over fell 8% year-on-year to 19% in July 2008, the lowest level recorded since January 2006. Similarly 60% of sellers of properties at fixed price accepted an offer below the asking price, compared with 33% during the same period last year.
Commenting on the results David Marshall, business analyst with ESPC said: “We are seeing an increasing number of sellers starting to accept the shift in market conditions by accepting a lower offer for their property than they may have originally anticipated.”
“For most people, they are able to balance this at the other end of the transaction when they come to buy as at that point they are in a very strong negotiating position allowing them to secure their new home for less than they expected.
Typically sellers take much longer to respond to a cooling market than they do to news of increasing demand. The fact that we are already seeing some sellers be more realistic about the market means we may start to see sales start to pick up toward the end of the year with buyers attracted back by lower asking prices.”