It's a buyer's market as credit crunch hits home

Average property values are edging upwards, but prices in some areas are down by more than £70,000.

PROPERTY prices in an area of Edinburgh have plummeted by more than £70,000 on average, while house values across the city have risen just 1.6 per cent, new figures have revealed.

The statistics from the Edinburgh Solicitors Property Centre (ESPC) present a mixed picture for house and flat owners in all parts of the city.

• Click here to see house prices in your area of Edinburgh

While prices are still nudging ahead of the same period last year, many parts of the city have seen average prices nosedive.

New developments and the lack of big sales in certain areas have caused some dramatic dips and peaks in some property prices.

In south-west Edinburgh, one of the city's most affluent suburbs, with a large stock of spacious family homes, the average cost of a home between March and May this year was down £70,062 – that's 21 per cent – compared with the same period last year.

The prices of homes in the city centre and Edinburgh South have also dipped, while there have been reductions in the average value of flats sold in the city centre, Edinburgh North and Edinburgh West.

But despite the situation in some parts of the city, the average price of property across the Capital in the three months is still 1.6 per cent ahead of the same period last year at £227,985.

David Marshall, business analyst at the ESPC, said: "The overall picture is we are moving towards a buyer's market.

"We currently have 6300 properties for sale in East Central Scotland – 50 per cent higher than last year. There is a lot more selection in the market and that leads to lower premiums.

"The seller may have to lower their expectations because the buyer is now in a stronger negotiating position. They have to balance their expectations for their own sale with an understanding of the market they are in, where they will be moving to and how much that will cost."

The average home in the Capital now sells for around 21 per cent above the asking price, compared to about 28 per cent last year.

The difficulty of many buyers at the lower end of the market accessing mortgages has been blamed for the cooling of prices, especially in smaller flats.

With 50 per cent more homes available for sale through the ESPC than the same period last year, prices are falling.

Mr Marshall said that changes to demand and supply means the average property is taking ten days longer to sell than the same time last year.

He added: "There are less properties selling and the same number coming on. A lot of buyers are taking a 'wait and see' attitude but sellers still don't want to sell at the wrong price, so they are holding on for a bit longer.

"Buyers, especially first-time buyers, have to be aware that, if they are able to secure a mortgage, they are in a much stronger negotiating position."

While there were six £1 million-plus sales in the city centre in 2007, so far this year there have been none.

In the south-west of the city, which includes Baberton, Balerno and Currie, the average price of a home between March and May 2007 was £333,510, but in the same period this year it was only £263,448.

But the ESPC said that part of the explanation for the drop was that the number of sales dropped from 76 to 55, while there were more smaller-value properties sold than last year.

Two-bedroom properties in the area fell 1.9 per cent, while 3-4 bedroom homes increased by 1.7 per cent.

In Murrayfield, year-on-year prices for flats are down 39.4 per cent at £217,494, but the average size of the property has also reduced, from 2.5 beds to two. While 15 properties sold for more than £750,000 last year, there have been only three £500,000-plus sales so far this year.

Across the city, the ESPC said that larger properties, where buyers are likely to have more access to credit, are selling well and still seeing price growth of around six per cent.

But many areas with a large number of flats – such as Gorgie, Dalry and Leith – are seeing static or negative prices as first-time buyers struggle to get mortgages after a tightening of lending by banks and building societies.

Recent figures from the Council of Mortgage Lenders Scotland showed there were 16,000 mortgages issued in the first quarter of 2008, compared to 20,000 in the first quarter of 2007.

John Lints, founding partner of the Lints Partnership, part of the ELPG group of five solicitor firms, said: "Although clearly we can't say that the market is doing as well as we would like it to, there are still properties being sold and prices are rising.

"There's no doubt that we have felt some effects from the credit crunch, but we are still in good shape compared to many other regions across the UK.

"In Edinburgh we are very lucky in that we have a broad-based economy, allied to a shortage of good-quality property, which allows our property market to be distinct and largely immune from the problems which have affected the English market."

Scott Brown, estate agency partner at Warners, said: "There's no doubt that the current economic conditions have been felt in Scotland.

"A lot of people are tightening their belts due to rising fuel prices and the cost of living, but these figures show that although the market has slowed recently, houses in Edinburgh and the Lothians are still selling, and prices in some areas are rising.

"Good properties are continuing to sell well and there are still many people looking to either buy or sell homes in the Lothians."

MP SUPPORTS REDRESS
NEW measures to protect people buying and selling their homes through estate agents have been hailed by an Edinburgh MP.

The UK Government has announced all residential estate agents must belong to a redress scheme by October 1 and has given greater powers to the Office of Fair Trading to remove rogue estate agents from the market.

Edinburgh North and Leith MP Mark Lazarowicz said the move was good news for Scottish home-buyers.

He said: "I've been pressing for more rights for new home-buyers, and this is a welcome first step.

"As estate agents have a much smaller share of the market in Scotland than elsewhere, because solicitors have the biggest share, the implications are not so great as elsewhere in the UK, but there are still thousands of properties bought and sold through estate agents in Scotland.

"This measure will help protect many people in Scotland who previously did not have adequate opportunities for redress."

• www.espc.com