Spring 2010 Market Comment
Activity in the housing market during January was more subdued that usual with the cold snap keeping buyers and, everyone else, in hibernation for much of the month. This is almost always a quiet time for the market but this particularly so. As I write this it is half term in Edinburgh and quiet once more as ski trips etc. are on the agenda.
February has, however, seen an increase in market activity. The number of well priced, high quality properties being either fully marketed or quietly discussed is growing daily. There is still an element of re-pricing for some properties which have languished from last year. Perhaps a result of over optimistic pricing in Q3/Q4 last year, or perhaps because the particular properties are simply not perfect. The market is a fairly harsh environment still and a lack of privacy or having too small a garden for the type of property is impacting prices considerably. Vendors certainly need to present their property well to achieve a sale.
Recent press seems to support our December predictions that the market may well remain fairly flat, at least in Scotland, although there are those more optimistic about price rises, suggesting that prices will begin to rise once more around Q3 of 2010. Stability in prices with the worst fears of further falls behind us would indicate a good time to be considering a purchase.
Lack of significant new build housing activity in Edinburgh & The Lothians will continue to put pressure on the existing housing stock, supporting prices. Many developers are making tentative steps back into the market but output will take a long time to catch up on the damage done through 2008 / 2009. Smaller developers picking up a manageable number of plots in good locations, are likely to do well. With sensible pricing and a “fundable” development model i.e. decent cash flow they can benefit from a relative lack of competition.
Finally, interest rates remain low despite increases in inflation. The Bank of England puts this down to weak exchange rates, higher fuel prices and VAT increases and believes the weak pace of the recovery will mean inflation is below target once these factors work through.
