Latest statistics released by ESPC reveal that the property market in Edinburgh is beginning to stabilise thanks to continuing record low interest rates, a stamp duty holiday until September, and a sense that economic conditions are improving.
The number of properties sold is up annually and the average price of a house in Edinburgh rose slightly between the second and third quarters in 2009 from £207,890 in Q2 to £208,359 in Q3.
The ESPC also reports that the rate of annual decline in the average house price eased. An annual fall of 11% in Edinburgh during the second quarter of 2009 was
followed by a more modest annual drop of 5% in the third quarter
Meanwhile, the average house price across East Central Scotland increased by 2.4%
from £191,095 during the second quarter to £195,624 in the third
quarter of 2009.
"Broadly speaking, house values are around 12% below levels witnessed at the
peak of the market, but since the turn of the year the average house
price in most areas has held firm," said David Marshall, business analyst with ESPC.
"During the first half of 2009 we
continued to see annual falls in the region of 10% as figures were
being compared to peak values from early 2008. These are now behind us
and during August and September the average house price was actually
slightly ahead of levels recorded during the same months last year.
Looking ahead, there is likely to be some fluctuation from
month-to-month but broadly speaking prices should be in line with those
witnessed towards the end of 2008."
The number of properties sold in Edinburgh increased annually from
1,322 in the third quarter of 2008 to 1,366 during the same three month
period this year. This marked the first time an annual increase in
quarterly sales had been observed in the Capital since the fourth
quarter of 2006.
With demand from buyers showing modest improvement, there were
indications that the negotiating position of sellers had strengthened
somewhat. 43% of homes sold at Fixed Price achieved the asking price
over the last three months - up from 33% in the preceding quarter and
from 29% during the same period in 2008.
Nationwide last Friday also reported an
increase in UK house prices in Q3 2009 to £160,159 (up from £154,066 in
Q2 2009). The Nationwide noted that Edinburgh is the most expensive city in
Scotland with an average price in Q3 of £232,632. That's a 120%
increase in the average Edinburgh house price in the last decade and an
annual change of -7%.
Beyond Edinburgh
Outside of Edinburgh prices in most areas returned to levels
slightly below those witnessed during the third quarter of 2007. A 7.3%
annual increase in East Lothian took the average price back over the
£200,000 barrier. This increase followed an 11% fall during the same
quarter in 2008. Looking over a 2-year period, house prices in East
Lothian have declined by 4.6%.
A similar picture was witnessed in
Falkirk where a 17.5% annual increase during the third quarter this
year followed an annual fall of 18.2% in the third quarter of 2008.
Over the full two years this meant the average house price in the town
saw a 3.9% fall from £147,799 to £142,010.
Housing Market Outlook
With house prices appreciating again, the property market is luring buyers back, particularly as many buyers expect interest rates to remain in the basement for a while. In March 2009, the Bank of England reduced interest rates to 0.5%, the lowest level in its 315 years, and it is not expected to raise them until late in 2010. The BoE is also expected to continue with its policy of quantitative easing (aka "printing money"), which is likely to keep the pound at historic lows against major currencies, making Edinburgh and UK property more attractive to buyers from abroad.
Robin Stimpson, ESPC
chairman remains cautious about the outlook: "The last two years have certainly seen a turbulent
period in the property market but in recent months we have seen far
more stability in the market. Demand has started to inch upwards over
the last few months with a number of buyers attracted back to the
market by factors such as low interest rates and the opportunity to
avoid stamp duty. The results we're seeing locally in East Central
Scotland are also mirroring trends at a UK level so - whilst it may be
too early to say the market has turned the corner - the picture for
homeowners is certainly more balanced than was the case towards the end
of last year."