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2013 property forecast - what's next for property in Edinburgh

Tuesday 11th December 2012

Residential property prices in the Scottish capital are continuing to decline, with the average selling price of properties in the last three months falling by 6.1% compared to the corresponding period last year, according to figures from the Edinburgh Solicitor and Property Centre (ESPC).

According to the data, the average selling price of properties sold in Edinburgh between September and November was £206,161, down from last year’s figure of £219,501.

In Edinburgh, 22.6% of properties sold over the last three months achieved their asking price – up from 21.6% a year ago.

One bedroom flats continue to be the most difficult to sell - with less than 20% making their home valuation price. And with mortgage brokers still reluctant to lend the number of people wishing to sell flats is still greater than the volume of people looking to buy; it’s a buyer’s market.

Here is what the experts think about the market in Edinburgh and its prospects for 2013?

Blair Stewart, Partner in Strutt & Parker’s Edinburgh office, said: “The overall picture is not as gloomy as these figures suggest. There have been positive signs in the market in recent months and I expect the market to remain steady next year. Our market analysis from Strutt & Parker’s core areas of the New Town, the Grange and Trinity show that properties valued between £300,000 and £900,000 have been remarkably resilient. The statistics show that in these areas there is an increase in properties reaching Home Report valuation or above and this has been proved by a number of recent closing dates where competition has clearly returned to the market.

“Properties in excess of £1.5m are generally struggling to attract competition from buyers and are less likely to sell in excess of the valuation. However, even so, some excellent sales have been achieved at this level in those areas mentioned – mostly notably four in the Grange this year.

“2012 has seen competition remain between the £300,000 and £900,000 mark. We had a very busy start to the year with a quiet summer before a strong October and November, partly due to a lack of supply pushing up demand and consequently increasing competition.

“I expect to see more of the same next year with prices remaining much as they are now. It will probably continue to be characterised by a lack of mortgage finance, concerns over job security and unwillingness on the part of sellers to reduce asking prices. The best way forward for the market would be an increase in mortgage availability and an emphasis on realistic pricing. We are finding that sellers who come to the market with a handle on the current economic realities with realistic expectations and a proper selling strategy in place are still finding buyers. Where vendors wish to start with a high asking price, properties tend to stick and the longer a property spends on the market the less likely it is to achieve its valuation figure. This applies across the board, from a one-bedroom flat to a Georgian townhouse.”

David Marshall, business analyst with ESPC, said: "For most of 2012 there have been a greater number of homes selling than in recent year but at prices below levels seen last year and this trend has continued into November.

"The number of people looking to sell is greater than the number who are in a position to buy meaning that buyers are generally able to negotiate a selling price that is a few percentage points below Home Report valuation.

"Smaller properties remain less likely to achieve valuation than larger family homes. Just 17% of one bedroom flats sold in Edinburgh over the last three months achieved valuation compared to over 30% of houses with three or more bedrooms.

"As you would expect, the likelihood of achieving valuation declines the longer a property spends on the market meaning that the best advice for sellers in most cases is to make sure they don’t set their initial asking price too high to avoid deterring potential buyers."

James Whitson, the director of estate agents Rettie & Co. responsible for the recent sale of J.K. Rowling’s Edinburgh home where the 'Harry Potter' author wrote four of her best-selling novels, said: “'There is a shortage of quality supply in Edinburgh and that when any property is correctly priced, in a prime location, it will attract significant interest and, in most cases, a buyer.”

Cindy Vials, regional sales director at Morris, commented: “First-time buyers face the hurdle of saving for large deposits, at the same time as covering daily expenses, which can delay the move onto the property ladder.

Andrew Smith, partner in Strutt & Parker’s Edinburgh office, said: “A lot will depend on what happens with the economy but I expect 2013 to remain much the same. High quality sensibly priced properties will continue to sell but viewers will not consider those deemed to be overpriced. It will become even more important to get the price right in order to attract viewers through the door.

“In Scotland, there is a rising trend for country properties with a small amount of land, particularly if it is within commuting access of a major town or city. The high cost of fuel is becoming a big consideration and the speed of the broadband connection, in remote areas, is ever more pertinent as the ability to work from home becomes an ever stronger selling point. These are probably of greater importance in Scotland, and particularly the Highlands, than the rest of the UK. Energy costs will also be a big consideration; buyers are actively looking for houses which are well insulated and energy efficient whereas before it was more of a bonus.

“The ‘doer upper’ will continue to be popular. Many buyers are looking for houses to which they can add value, given property prices themselves are not necessarily going to move much next year.

“Also of interest going forward is the lack of seasonality in the market now. We can no longer look at the first weeks in the spring or autumn and know we are going to be very busy. There may still be some uplift, particularly in the spring, but now we can sell property almost any day of the year and there is no real obvious pattern.”

David Alexander, proprietor of DJ Alexander, one of Scotland’s largest independent letting agencies, believes that private rents in Edinburgh, like much of Scotland, will rise in 2013, after the Scottish government decided to outlaw up-front service charges (letting agent fees). As a result tenant charges, other than rent and a refundable deposit, are now illegal.

he said: “This new legislation could end up costing tenants more than it does at present because the one-off charge will be replaced by a higher monthly rental over the entire length of each new lease signed.”

Mr Alexander estimates that, depending on property type and location, the average rent will rise from between £10 and £25 a month as a result of the impending legislation.

He added: “Sensibly, the government will continue to allow flexibility on how rents are charged therefore reputable letting agents will be able to adapt to the change and continue to combine the role of successfully running a business while playing their part in assisting individuals, couples and families access to suitable and affordable accommodation.”

              

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