Autumn 2010 Market Comment

With the (very enjoyable) madness that is the Fringe Festival behind us, Edinburgh once again returns to normal and we can turn our attention to the property market. Traditionally the end of the festivals and the return of children to school sees interest and transaction levels pick up, so what are the figures telling us and what does it mean?

ESPC figures showed the average Edinburgh house price rising 11.2% in the year to the end of August. This is a small (2.8%) fall from the previous month and follows a rise (3.5%) June to July and a fall ( 1.21% ) May to June. Transaction numbers, perhaps a better sign of the markets health, have risen only slightly. There has been a significant increase in the number of properties for sale meaning that supply comfortably now outstrips demand. Purchasers should be driving a hard bargain in those specific areas and sectors where there is a good choice of housing stock.

Stacks own monitoring of the market for properties over £400k saw 317 new properties added in June, 110 in July and 125 during August. A continuing trend during these three months was price reductions from agents which were appearing on a regular basis.

Looking forward, the increase in stock levels and continuing trend to reprice downwards should mean that prices remain subdued for several months to come. Economists report improved economic data and a strengthening labour market, however with looming public sector cuts this seems likely to stall, with a gradual recovery over the next couple of years the most likely scenario. Continuing low interest rate are still playing a fundamental roll in proping up demand and the key measures of affordability are also favourable, albeit supply of mortgage lending is still poor.

The message for the rest of the year must then be, don’t expect anything too dramatic to happen in house prices. Those looking to move should certainly not hold back if they have funding in place.