It seems hard to believe that 2016 has been and gone already but, with the last of the Christmas decorations now packed away for another year, it’s time to review all of the latest facts and figures from the Edinburgh property market before turning our attention to what 2017 may have in store.
As we reported throughout 2016, market conditions last year were stronger for sellers than they had been for almost a decade, with homes selling quickly and properties regularly achieving selling prices that were in excess of their Home Report valuation. As the year drew to a close this continued to be the case.
Latest figures from ESPC showed that during the final three months of 2016 the average house price in Edinburgh stood at £232,781. That marks an increase of 3.8% compared to the same period in 2015.
With buyer demand strong, the average time that a property for sale in Edinburgh spent on the market shortened over the last year. The average selling time in the Capital came down from 29 days during the fourth quarter of 2015 to just 22 days during the same period in 2016.
The strength of sellers’ position in the market is perhaps best illustrated when we look at the prices that properties are achieving relative to their Home Report valuation. In the final three months of 2013 the majority of properties sold in Edinburgh were actually secured for less than their original valuation. Since then, the percentage of sales where the valuation was met or exceeded has risen each year and between October and December 2016, over 70% of sellers achieved a price equal to or above Home Report valuation.
Demand Outstrips Supply in 2016
The reasons why sellers found themselves in such a strong position last year are fairly simple. In the first instance, demand from buyers was consistently high, fuelled by low interest rates coupled with mortgage lending and economic conditions that were more favourable than they had been for a number of years.
At the same time, the supply of properties coming onto the market was comparatively low. Despite the favourable market conditions, many would-be sellers opted not to put their home onto the market until they found somewhere that they wished to buy. This trend became somewhat self-perpetuating as the more people who opted to wait until they saw a property they wanted to buy, the less properties were coming onto the market and the longer these people had to wait before a property would become available that they wanted to buy.
As a result, while there are exceptions in even the most buoyant of markets, the majority of properties that came onto the market in 2016 attracted multiple notes of interest and were able to quickly proceed to closing dates. At that point, interested buyers are motivated to submit their best possible offer to secure the property making it highly likely that a price in excess of the valuation will be achieved.
A More Balanced Market in 2017?
As we turn our attention to what 2017 has in store, there are reasons to believe that the market will become more balanced in the months ahead. Last month we noted that there had been tentative signs during October and November that more sellers were getting ready to take the plunge and put their home on the market. We saw nothing to change this view in December, with Warners’ seeing a rise of almost 70% in the number of pre-sale valuations that we were asked to attend compared to December 2015.
Many of these sellers indicated that they were planning to act in the new year and, assuming that they go ahead and get their homes onto the market, this will offer a real boost to supply and ease the upward pressure on house prices that we saw last year.
This will be welcome news of course for first-time buyers for whom market conditions had become increasingly challenging last year, not least because banks are not typically willing to offer loans that exceed the valuation placed on a property.
If you are thinking of buying or selling in 2017 and need any help or advice, please don’t hesitate to contact us on 0131 667 0232 or by emailing firstname.lastname@example.org and one of our friendly, expert team will be delighted to help.