Figures released today by Edinburgh Solicitors and Property Centre (ESPC) reveal the housing market in Edinburgh has continued to cool with annual inflation falling to its lowest
level since 1993. A rise of just 1.2% took the average price in Edinburgh from £207,669 in the first quarter of 2007 to £210,123 during the first three months of 2008.
The figures come just days after an International Monetary Fund report suggested that Britain may suffer a US style housing crash that takes up to 30% off current house prices. However, the ESPC suggests that with a comparatively low year-on-year sales drop in Edinburgh of 6.7% (from 1,721 sales in 2007 to 1,606 in 2008), the capital "should
be well placed to avoid the downturn in prices projected in England
and Wales."
Properties rose in many areas of Edinburgh. First-time buyer properties were still buoyant with 1-bedroom flats in Leith Walk/Easter Road and Gorgie/Dalry rising above trend with 4.9% and 8.9% price increases. Larger suburban houses continued to outpace the rest of the market with a 9.4% rise in 3 bedroom semis and a 13.8% rise in 4-bedroom detached properties. Illustrating how mixed the market has been from area to area in Edinburgh, 2-bedroom flats in Marchmont dropped 5.3% to £260,000, while city centre properties gained 3.3%.
"As expected, we are now seeing growth in the Capital fall to considerably lower levels than those witnessed in previous years," said ESPC chief executive Ron Smith. "The figures within the Capital are fairly reflective of a static market, with slightly
higher levels of inflation being reported in some areas, and slight
falls being witnessed in others."
Smith attributes the cooling to a reduction in affordability and tighter lending conditions for home-buyers. "The credit crunch has also meant that
buyers are finding mortgage deals may be more expensive than at this
time last year which puts a further constraint on demand. Overall we
are likely to see the current situation continue throughout 2008,
with inflation in Edinburgh over the year projected to stand at
around 2 to 3%. More affordable areas outwith the Capital are likely
to fare slightly better, with growth across East Central Scotland
expected to be in the region of 3 to 5%."
Robin
Stimpson, ESPC chairman concluded: "Over the last few years
consistently high levels of growth have meant some people started to
consider inflation in excess of 10% to be the norm. Clearly this is
not the case, and that rate of inflation simply would not be
sustainable over the longer term. The credit crunch has certainly had
an impact on demand, but the market was due to see a period of
stability, and these figures are largely reflective of that."