Now the schools have gone back, what’s happening in the property market in East Central Scotland this autumn?
The doom and gloom predicted at the beginning of the year in relation to house prices has not come to pass. The Edinburgh Solicitors Property Centre’s House Price Report for August indicates a price drop of 2.8% across Lothians, Fife and the Borders for the three-month period June – August 2023 compared with the same period one year before, though there are significant variations area by area. Central Edinburgh average prices fell 15.7% year-on-year, but at the other extreme, the average selling price of three-bedroom houses in Cramond, Barnton and Cammo increased by 28.6%.
Overall, the figures suggest a slight cooling of the market after high levels of sustained activity. In recent periods of high activity, the market didn’t really slow during the summer months. Since interest rate rises have kicked in, we are perhaps seeing a return to a more traditional market where a slower summer is a feature.
The context
While nobody likes the value of their property to fall, it has to be put in context. Prior to the recent interest rate rises, prices were at record highs. The market was booming and prices were increasing inexorably. In both June 2021 and June 2022 the office of National statistics reported prices increasing at about 14% per annum in Scotland. This was despite interest rates starting to rise in December 2021. This was, of course, the first of fourteen rate increases and it takes time for these interest rates to work their way into the market. There is no doubt that this has now happened, with the average annual price change across Scotland in June 2023 being negligible. What is happening is a much needed alignment of property prices.
The market certainly slowed down over the summer months. The ESPC reports sales volumes down 10.5% year-on-year, and properties taking an average of 20 days to sell. This compares with an average of 13 days the year before. Although 30% of properties still went to a closing date, there were 54% more fixed-price properties than the year before. Hopefully this means that more first-time buyers will be able to enter the market. First time buyers were finding it difficult to compete when prices were rising so quickly.
The property market outlook for autumn
Some lenders are offering 95% loan to value mortgages, with a small number of 100% products available. The downside for first time buyers is mortgage rates are close to a 20-year high. However, the alternative is renting and, depending on the property, the mortgage payments might be about the same as rent. First-time buyers don’t pay LBTT on the first £175,000 of the price and beyond that, pay only 2% between £175,000 and £250,000. As interest rates start to come down, prices will start to increase and it might be worth bearing the pain of a two-year fixed-rate mortgage at a relatively high rate, to get onto the housing market now, on the basis that your next mortgage will be cheaper.
Although it’s early days since the schools went back, Gibson Kerr are seeing more enquiries from prospective property purchasers. The volume of new properties coming onto the market is down 3.3% compared with last year. If this trend is maintained and demand continues to outstrip supply, prices will rise.
Contact us
For buyers and sellers, the Gibson Kerr Property Team in Edinburgh are happy to give you guidance on how to buy and sell in the current market. For further information, contact us on 0131 226 9167 or property@gibsonkerr.co.uk.
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