The first month of 2017 is already in the rear view mirror and so far, sellers are continuing to find the Edinburgh property market to be very much in their favour.
Just over 86% of the homes sold by Warners during January this year achieved a price equal to or in excess of their Home Report valuation. That’s double the figure recorded during the first month of 2016 when just 43% of homes were purchased for a price at or above the Home Report valuation.
On average properties achieved a selling price that was 3.6% above the Home Report valuation, but there were a number of instances where buyers were willing to offer more than 10% above the valuation figure to secure their new home.
Lack of Supply Fuelling Higher Prices
As was the case throughout 2016, it has been a lack of properties coming onto the market that has fuelled many of the higher offers that we’ve seen this year. The number of homes currently available on the market is around 40% lower than we had seen early in 2016. The number of buyers looking for homes has continued to rise however, meaning that in most cases there are more people competing to buy each property.
This increased competition means that a lot of sellers are able to set a closing date shortly after putting their home onto the market, at which point buyers will be motivated to submit higher offers to secure the property. Exacerbating the situation is the fact that if a buyer finds that they have been unsuccessful at a number of closing dates for different properties, they will ultimately decide to submit a higher offer to finally secure a home.
Somewhat ironically, one of the major barriers preventing more properties coming onto the market has been a lack of properties available for sale. When speaking to potential sellers, the most common reason we hear for them delaying putting their home onto the market has been that they have not been able to see anything that they wish to buy. That being the case, they delay putting their home up for sale until they see something that they wish to buy, submit an offer subject to sale and then look to get their own home onto the market, confident that they will be able to quickly find a buyer.
There have been some early indications that more sellers are willing to take the plunge and get their home on the market early this year. So far in 2017 the number of homes that Warners have brought to the market is up by more than 10% on an annual basis and our local sales experts are attending more valuations for sellers who are thinking about getting their home onto the market.
Increasing Housing Supply a Long-Term Problem Locally and Nationally
Increasing the supply of properties available for sale is a long-term issue facing not just the market in Edinburgh and the Lothians but also across the UK. More of us are living longer while at the same time the average household size has decreased. These two factors mean that the number of households is projected to continue to rise in coming years and at present the rate at which we are building new homes is not sufficient to keep pace with rising demand.
The UK Government released their White Paper on the housing market earlier in February and its focus was very much on boosting housing supply. North of the border, the Scottish Government has also indicated a strong desire to improve the volume and quality of housing stock.
There are no quick fixes however and addressing the lack of housing supply will require a coordinated effort by government and local authorities. In the meantime, sellers are likely to continue to enjoy a favourable market for some time to come.