For those looking to sell a property in Edinburgh and the Lothians, there has rarely been a better market to sell in than the one we saw during 2021. Demand from buyers consistently exceeded supply meaning that there were typically multiple people competing for each property, causing buyers to have to pay significant premiums over Home Report valuation in order to secure a property.
Entering the year though there was reason to believe that the market would start to calm down. With Consumer Price Inflation (CPI) rising, this would put pressure on households’ disposable income and dampen demand from buyers. So, was this expectation borne out in reality? We look back at what happened to the local property market during the first six months of the year, before looking ahead to what we can expect from the rest of the year.
During the first half of 2022, the market remained favourable for those looking to sell a property in Edinburgh and the Lothians. At Warners Solicitors we recorded an 11% annual increase in the number of homes going under offer, with properties spending an average of just 15 days on the market.
The number of homes available for sale has remained well below normal market levels so far this year and, with demand still high, sellers have frequently had enough interest to set a closing date. Almost 40% of homes that went under offer during the first half of 2022 were sold at closing, up from just under 30% of those sold during the same period last year.
Perhaps unsurprisingly given the excess of demand over supply, the average premiums over Home Report valuation being achieved have reached record levels. Properties sold by Warners during the first six months of the year achieved an average of 9.1% over and above their valuation – well above the figure of 5.1% during the first half of 2021, and the highest figure on record since Home Reports were introduced in 2008.
Family Homes Continue To Attract Higher Premiums
A consistent pattern since lockdown was first eased in mid-2020 has been that home buyers have been putting a greater importance on properties with an outdoor space, and in many cases are willing to sacrifice proximity to the city centre in order to get this. Consequently, it is the larger family homes that have been attracting the highest premiums over Home Report valuation.
In the first half of the year, the average premium required to secure a four-bedroom house was 12.0%. By comparison, one-bedroom flats sold during the same period attracted an average premium of 7.9%.
Early Signs of Market Easing Entering Second Half of 2022
Although the market continued to strongly favour sellers during the first half of the year, there are some tentative signs that the market is finally starting to cool down. For example, the average number of viewing requests that we have received has eased from around 450 per week in January and February to around 300 per week more recently. Whilst this is in part attributable to seasonal factors as people head off on holiday, it also speaks to the fact that the market is finally starting to cool off after a two-year period of growth that would be unsustainable over the longer term.
Looking ahead, the expectation is that a combination of high inflation and dampening consumer sentiment will lead house price inflation – which had peaked at over 10% last year – to come back to more sustainable levels as we head towards the end of 2022.
If you’re thinking of buying or selling a property, get in touch with Warners today on 0131 662 4747, or by email at firstname.lastname@example.org and one of our friendly estate agency experts will be delighted to help.