ESPC House Price Report - July 2011

Overview
  • House prices declined in most areas of Scotland in the three months to July. In most cases falls this year offset rises during the same period last year.
  • In Edinburgh the average house price in the three months to June was £222,577 - down 3.8% annually.
  • The number of homes available on the market remains 40% above historical norms.
  • 68% of properties sold at Fixed Price were secured for less than the asking price - up from 53% during the same period last year.
  • Continued excess of supply over demand means annual falls in house prices of between 3 and 5% are likely in coming months.
Edinburgh

The average price of a property sold in Edinburgh between May and July stood at £222,577, down 3.8% from £231,309 during the same period last year. The decline this year came on the back of a 9.5% year-on-year rise in 2010 meaning house prices remained ahead of 2009 levels.

David Marshall, business analyst with ESPC, explained: "Prices rose sharply during the first half of 2010 and the falls we are seeing just now generally offset growth seen last year. In Edinburgh the average house price is still around 5% higher than it was in 2009 but in months ahead we should see prices return to levels witnessed two years ago. Competition remains high amongst sellers and market conditions are still in favour of those who are in a position to buy.

"The market for smaller, starter homes has been harder hit than that for larger properties due to a drop in demand from both first time buyers and buy-to-let investors. The average price of a one-bedroom flat in Dalry and Gorgie, for example, has fallen in each of the last three years and is now £97,486 - almost 25% below peak levels. Similarly, in Leith Walk and Easter Road the average price of a one-bedroom property is now just over £100,000 having peaked at over £130,000 in 2008.

"This obviously presents problems for those looking to sell smaller homes if they bought at the peak of the market on a high loan-to-value ratio mortgage. On the other hand improved affordability will be welcomed by first time buyers, many of whom had been priced out of the market by years of rapid house price growth. One in ten homes for sale in the Capital now is available for under £100,000 compared to just one in twenty at this time two years ago."

Lothians

Midlothian was the only area to see an annual rise in home values in the three months to July. A 5.8% increase took the average house price in the region from £170,264 in 2010 to £180,119 this year.

East Lothian and West Lothian both saw prices decline during the last year. In East Lothian the average house price now stands at £231,054 following a year-on-year fall of 3.1% whilst in West Lothian a drop of 6.8% took the average house price from £175,068 in 2010 to £163,193 this year.

David Marshall commented: "There is still some volatility in figures at a regional level but by and large the trend is that prices are heading back towards 2009 levels. The market for larger, quality family homes remains comparatively strong but generally speaking we expect to see modest annual falls in most areas during the second half of 2011."

Dunfermline

The average price of a property sold in Dunfermline during the three months to July stood at £138,642. This marked a drop of 3.2% from the same period in 2010 although prices were still ahead of the figure of £133,586 recorded in 2009.

Commenting on the latest figures David Marshall, business analyst with ESPC said: "The number of homes selling in most areas is still about 50% below pre-credit crunch levels so you can often see some volatility in figures from month-to-month but over the last two years there has been relatively little change in prices within Dunfermline. Sellers are generally having to show a willingness to negotiate on price if they wish to secure a sale, although the flip side of that is, of course, that they will probably have to spend less than they may have thought on their next home when it comes time to buy."

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