Homes shortfall in Edinburgh and east helps boost prices
The dominant property agency for Edinburgh and east central Scotland has reported a shortfall in homes coming on the market, helping boost prices by more than 6% on average during last year.
This is more than twice the pace of inflation in the rest of Scotland.
It places the average home in the capital at 71% more expensive than the national average.
The Edinburgh Solicitors Property Centre (ESPC) said the low number of properties for sale had driven buyers to strike deals faster. They spent an average of 19 days on the market.
Across the region, the proportion of homes achieving higher prices than the valuation included in home reports rose from 65% at the end of 2016 to 75% last year.
But the problem is circular – it is suggested home owners are reluctant to sell their homes if they can foresee that they could be stuck in trying to find their next home.
The annual review said buyers had concerns about Brexit, but there was little evidence that it had much impact on the the east central Scotland market.
In the city of Edinburgh, the ESPC said the average selling price increased by 7% year-on-year to £249,400, but with wide variations across the city and between types of housing.
That has put the price of property in the capital far ahead of most other parts of the country, with prices rising faster, and there are concerns that the city is becoming too expensive for lower-paid workers.
The most recent house price figures from Registers of Scotland showed the average price of buying a house was £145,000 in October last year, up by less than 3% on the preceding October.
‘Shortage of properties’
Paul Hilton, chief executive of ESPC, said: “As with 2016, we have seen a decrease in the volume of properties for sale, and we believe this could be due to a reluctance to sell in the face of a shortage of properties, as sellers are concerned that they may have difficulties finding a new home.
“The second home tax, introduced in 2016, has also meant that the 3% tax on those buying before they sell, has also led to a hesitation for sellers, while the changes to Stamp Duty has also had a slow-down effect on the top-tier properties.
“We are currently seeing a high demand for one and two-bedroom flats, and this could be the result of more first-time buyers being able to get 95% mortgages and the popularity of buy-to-let properties. These points have all had an effect on the traditional patterns of buying up and replenishing active stock on the market.”
A separate review of the whole Scottish market by Rettie’s agency found a “significant improvement” in Scottish house sales above £325,000 during 2017. That is close to the point at which the new Land and Buildings Transaction Tax made buying a home more expensive than it had been under Stamp Duty.
It found mortgage lending to first-time buyers and home movers last year reached the highest level since 2007, when the market began spiralling into a crisis.
While UK trends were pointing to a potential slowing of the housing market towards the end of 2017, Rettie’s economists found signs that the Scottish market continued to improve.
Subdued economic growth should help house prices grow this year, it was claimed, but by only 2.5%.