SCOTLAND’S capital city looks set to buck the 10% crash in house values predicted by a UK think tank.
The EY Item Club has forecast that average house prices across the UK will be slashed by 10% by the end of the year but buyers in Edinburgh are unlikely to see such a drop, according to the city’s biggest property agency ESPC.
While its latest report shows that during February to April this year, property prices in Edinburgh fell by 2.6%, ESPC chief executive Paul Hilton told the Sunday National he couldn’t envisage a 10% fall.
Some areas of the city have still seen huge increases – in Stockbridge, Comely Bank, Fettes and Canonmills, ESPC reported that the average selling price rose by 12.1% to £327,435 for two-bedroom flats. Nearby, in Trinity, Newhaven and Inverleith the average selling price of two-bedroom flats was £287,943 – an increase of 10.9% year-on-year.
“Even back in 2009 when the market was at its worst, Edinburgh and Lothian were really resilient and we did not see those big swings we were seeing elsewhere in the UK and I really don’t think we will see them this time around,” said Hilton.
“Certainly things have cooled a bit but there is no one area where we have seen a massive decline.
“There are a number of reasons for that with one being that there is only so much supply of property – there are not going to be any more Georgian townhouses for example, so generally the market holds up well when there is a restricted supply.”
He said the shortage of homes to rent in the capital and high rents were also driving more people to try to buy a house, especially as the market was now a bit kinder for first-time buyers.
“Last year, properties were achieving 100.6% of their home report value and this year it is sitting at 102.7% so you don’t need quite as big a deposit as you did,” said Hilton. “There is 4% less to find on average if you are a first-time buyer and there are more fixed-price properties as well so while it had been very much a sellers’ market in Edinburgh, there appears to be a rebalancing towards a more fair market between buyers and sellers.”
At the same time there is still a shortage of property for sale or rent within Edinburgh which he said could be helped by developing brownfield sites or by turning empty retail properties into residential ones.
Across the whole of Edinburgh, the Lothians, Fife and the Scottish Borders, ESPC has seen a 1.1% drop in house values.
However although the average price has dropped to £267,679, it is still substantially higher than the same period in 2019, when the average selling price was £242,840.
Midlothian recorded the highest price increase over the past three months with the average selling price rising 14.1% annually to £263,535.
This was followed by West Fife and Kinross where the average selling price increased by 7.9% to £211,740.
Meanwhile estate agent and law firm Lindsays has calculated that the average price of homes sold through its Edinburgh office in the year to March was £322,250 – more than £60,000 higher than before the coronavirus pandemic. That compares with £259,893 in the 2019/20 financial year, the vast bulk of which preceded the pandemic. The firm’s average price for home sales through its Edinburgh office in 2021/22 was £314,798.
Lindsays said that “prices across Edinburgh and throughout the Lothians show no signs of dropping” – with values remaining “stable and strong”.
Maurice Allan, managing director of Lindsays’ residential property department, said: “We’ve read lots of headlines about house prices dropping. We’re not seeing that.
“Edinburgh – as with other parts of Scotland – is bucking the trend that’s being reported elsewhere. We’re not in a market where prices are dropping. In fact, it’s a market that’s pretty solid.”
In Dundee, where Lindsays’ estate agency team also operates, the average price of homes sold in the year to March was £205,790. This is up from £161,786 in 2019/20. The firm’s average price in 2021/22 was £181,849.
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