Property prices in Edinburgh have continued to rise during the summer months. Latest figures show that, during the three months to July, the average property price recorded by Warners was £213,784 – 6.6% higher than the figure of £200,471 observed during the same period in 2016.
The number of homes selling also increased substantially, with a 26% annual rise in the number of sales agreed between May and July. With demand in the market still strong, it is probably not surprising that most metrics show that the market is favouring sellers. During the three months from May to July, almost 80% of properties sold through Warners achieved a price that was in excess of their Home Report valuation. A year ago that figure stood at a comparatively modest 60%.
At the other end of the spectrum, just under 14% of properties sold for less than their Home Report valuation between May and July 2017, down from almost 25% a year ago.
The average premium that properties are selling for over and above their Home Report valuation currently stands at 6.5%. This means that - based on the mean valuation for properties sold in the last three months - buyers have been paying an average premium of over £13,200 above the valuation figure to secure a property.
As we have highlighted before, the strength of the market can present substantial challenges for first time buyers as lenders are typically not willing to lend over the Home Report valuation figure.
For those who are struggling to get onto the ladder, we have at least started to see some signs that the market has cooled off a little over the last few months. The average time taken for a property to sell has increased from 15 days earlier in the year to 20 days more recently and, whilst this is still very quick by historic standards, it does reflect the fact that the market has eased somewhat as the year has progressed.
In large part this has been because we have started to see more properties coming onto the market in 2017. During the first seven months of the year Warners brought over 500 properties for sale to the market, a rise of 20% over levels seen in 2016.
More homes coming onto the market means that there is now greater balance between supply and demand. As we move forward this will mean that there is less competition between buyers for individual properties, easing the upward pressure on property prices in the months ahead.
Looking further afield, it’s worth noting that across the UK there have been signs of a slowdown in the housing market throughout 2017. While Edinburgh has bucked this trend for much of the year, no market operates in isolation and the trends that we have seen across the country will inevitably have a knock-on effect on the local market.
We continue to expect that house price growth will ease off as we head towards the end of 2017. Annual inflation, which for much of the year has been well over 5%, should edge down to 2-3% as we see more equilibrium between supply and demand.