Lots of surveys and statistics around, but which of them are true? And are property prices falling in Scotland?
Recently released statistics from the Department for Communities and Local Government show an annual fall in property prices in Scotland in the past year of 2.3%.
Meantime, Rightmove’s latest House Price Index showed the average asking price increased by 0.7 per cent over the month to £233,139, following a drop of 2.1 per cent between July and August. This is a UK statistic, not a Scottish one, and I’ve already blogged about why asking price statistics aren’t terribly useful: http://mov8realestate.com/blog/item/99-homecouk-september-home-asking-price-index-shows-property-prices-in-scotland-and-the-uk-are-down.html
Meanwhile, Nationwide reported a 0.4% year-on-year drop in prices. Halifax around the same time reported a 2.6% drop in property prices. These statistics are based on UK-wide figures again and are only based on customers of those lenders.
The trend certainly appears to be downwards. So what’s our take on things? Are property prices falling in Scotland?
The honest answer is that it depends on where you are and what type of property you have. Certain properties certainly have fallen significantly in value in the last few years. On the other hand, other areas of traditionally high demand have recovered from the house price crash that we saw in 2008-09 and are selling now for about what they sold for at the peak of the market. These areas are less widespread than the areas where prices have fallen and where demand remains very low.
Added to that are some areas of complete carnage where prices, on the face of it, have fallen by about 50%. These are often new-build developments. Some of these are not even completely finished, the developers either having downed-tools or gone bust. The reality is that with many of these properties were never really worth what the developers were selling them for: two bedroom flats in not the greatest areas of town selling for more than large, three bedroom traditional flats in better areas. People just got carried away. But these do contribute disproportionately to the statistics about house prices falling.
Prices have certainly fallen, and in some areas significantly. However, any decline now is quite gradual. There is of course no guarantee, at any time, that prices won’t plummet based on economic factors completely out of our control. However, the statistics both on a national and a more local level do suggest a gradual decline or, at best, price stability, for the foreseeable future. What we certainly won’t be seeing is prices rising dramatically.
What we are seeing is that prices are relatively stable compared to last year and the year before. Asking all of my colleagues, in the Property Management team and also the Valuation Team, what they are seeing in terms of pricing and what advice they are giving to people who are on the market or thinking of going on the market, they are saying that they aren’t valuing significantly differently to what they have done in the past couple of years. They certainly aren’t allowing for a 5% or 10% drop in any areas in that time. The good news is that we’re actually selling proportionately more of the property stock that we have on the market than we did a couple of years ago.
Of course, against a backdrop of high inflation, even stable prices represent a drop in value in real terms. However, in terms of pure house selling prices, what we are seeing is that prices are relatively stable, perhaps showing gradual decline in some areas, versus what they were a year or two back. This represents, in most areas, quite a significant drop from the peak valuations of 2007, but the market seems to have adapted to that and demand has been stable in the last few months too, indicating that if a property is reasonably priced and is not in an area of abnormally low demand, there is a very good likelihood of it selling.