The best of the summer months are now behind us but the property market in Edinburgh remains, if you’ll forgive the pun, hotter than it’s been for a number years.
House and flats for sale in Edinburgh and the Lothians are continuing to attract high levels of demand, with all of the major market indicators reflecting this. Selling prices are rising, more properties are exceeding their Home Report valuation, higher premiums are being paid over the valuation figure and properties are spending less time on the market before finding a buyer.
Looking firstly at selling prices, the average price of a property sold through Warners in the three months to August was £210,577 – up fractionally from £208,804 during the same period a year ago.
The actual number of homes changing hands rose far more sharply, however. Between June and August this year Warners recorded over 200 property sales, up 22% on the same three months in 2016.
The strength of the market can also be seen when looking at the prices that properties are achieving relative to their Home Report valuation. Between June and August this year 76% of properties sold achieved a price that exceeded the valuation, compared to 62% a year ago, and 52% in 2015. Only 11% of homes sold in the last three months were secured for less than the valuation figure, down from 17%.
Properties Attracting Larger Premiums
One of the starkest indicators of how much the market has favoured sellers in 2017 is the average premium being paid over and above the Home Report valuation. At the start of 2015 properties in Edinburgh were selling for a little less than 1% above their valuation and, over the next two years, the average premium generally stood between 2 and 3%. Early in 2017 however, the average premium being paid to secure properties rose sharply and now stands at just over 7%.
The fact that the average premium being paid has risen from between 2 and 3% to over 7% may not sound like a big deal, but when we look at what that means in monetary terms the change is substantial. For example, during 2015 and 2016 the average premium paid on a property valued at £200,000 would have been between £4,000 and £6,000. This year, that figure would stand at over £14,000.
The change is particularly important because lenders are generally only willing to lend up to the valuation figure meaning that if a buyer wants to offer more than the valuation, they will need to have the cash available to do this. As we have noted before, this can make things particularly challenging for first-time buyers or those looking to move up the property ladder for the first time as, in most cases, these people will not have large cash reserves to draw from.
Shortage of Homes For Sale Continues to Plague Market
The main factor driving the market this year has been a lack of supply of properties coming onto the market. We have been saying for some time that as potential sellers see how well the market is performing, more people will be tempted to bring their property onto the market bringing more balance between supply and demand.
To date, this has not happened consistently and the likelihood now is that we will continue to see the balance of power lie firmly in favour sellers throughout the remainder of 2017. Over the longer term however, we still expect that more sellers will return to the market during the first half of 2018. This will help to bring down some of the lofty premiums that have been required to secure a property in 2017 and ease the pressure on buyers in Edinburgh & the Lothians.
If you are thinking of buying or selling, or if you have any questions about the market, feel free to contact us on 0131 667 0232 or by emailing firstname.lastname@example.org and one of our team will be delighted to help.