FIGURES on the housing market in Scotland paint an often confusing picture. The number of properties actually selling is half that witnessed in previous years, yet we're told the average house price is continuing to rise.
Whilst the average house price in Edinburgh continued to rise, growth during the first half of 2008 was very low and, in many cases, the level of inflation was somewhat skewed due to a higher proportion of sales being accounted for by larger family h
omes.
In more recent months, we have seen clear signs that demand from buyers is down. Sales volumes have fallen sharply, with the number of homes sold in July around half that seen during the same month in 2007. This led to a considerable upturn in the number of properties available for sale.
Sellers are facing increased competition and buyers are in a much stronger negotiating position than they have been for well over a decade.
Generally, sellers respond to news of a cooling market slower than they do to news of increases in house prices, but the signs are that sellers have already reacted to this shift in the market and are willing to accept lower bids. The average premium achieved on properties marketed at offers over is around eight per cent lower than a year ago. Similarly, an increasing number of vendors selling properties at fixed price are now accepting offers below the original asking price.
At the turn of the year, we expected growth in the Capital to remain at around two per cent throughout 2008 but, although it has not happened as yet, this quicker than anticipated shift in sellers' behaviour should start to be reflected in average prices soon, and we may start to see prices fall in some areas.
Over the next 18 months, tightened lending criteria will continue to exert a downward pressure on prices, meaning people should not expect a return to high levels of house price inflation during that time.
The reality is that it will remain a buyers' market for some time to come.
• Ron Smith is chief executive of the ESPCThe full article contains 362 words and appears in Edinburgh Evening News newspaper.
