Edinburgh Buyer Activity on the Rise
Although I can hardly believe I’m saying this, we’re already past the midway point of 2015. The sun is out and the Festival is winding down, but we haven’t seen any signs of the housing market taking a break for the summer this year. The number of homes changing hands has risen sharply in 2015 and this has helped to bolster confidence, encouraging more sellers to put their homes on the market. Overall, sales and listings have been at the highest level we’ve seen since 2008.
We’ve written before about how market conditions this year are much more favourable for sellers than has been the case for a number of years. The statistics certainly reflect that. During the first seven months of 2015 the average selling time stood at just four weeks. That’s down from five weeks last year, and from almost eight weeks in 2013.
In most cases sellers are managing to secure a price that is equal to, or in many cases in excess of, the Home Report valuation. Over the last three months just over two-thirds of homes sold in the Capital achieved their Home Report valuation. Just three years ago only one in three homes achieved the Home Report valuation, which gives you an idea of how much market conditions have swung in favour of sellers.
Return of Offers Over
The change in the market has seen a return of the Offers Over approach to marketing properties. A combination of the downturn in the market and the introduction of Home Reports had led to this approach becoming almost obsolete. For many years the vast majority of sellers opted to set the asking price close to the Home Report valuation and market their home at Offers Around or at a Fixed Price. Even last year, only a fifth of homes coming onto the market with MOV8 were marketed at Offers Over.
This year the situation is very different. More than half of the homes we have helped to market advertised in this manner. The reason is fairly simple. In a more buoyant market, properties attract more buyers and closing dates are much more common. By setting an asking price that is close to the Home Report valuation and inviting offers over that amount, buyers are incentivised to submit their best offer, especially where a closing date is involved.
Properties marketed at Offers Around or Fixed Price are unlikely to receive offers above the asking price as it sets something of a psychological ceiling on bids in buyers’ minds. For that reason, when conditions are more favourable for sellers it is less often advisable to use one of these methods, at least in the early stages of a property being on the market. If a property does not sell quickly, sellers always have the option to switch to a Fixed Price if they want to attract buyers by letting them know the highest value that they are likely to have to bid to secure the home.
An Eye On Interest Rates
If you’re a homeowner, or if you’re thinking of buying a home any time in the near future, it’s always a good idea to have one eye on what’s happening with interest rates. For over six years now, the Monetary Policy Committee (MPC) of the Bank of England has opted to keep the Bank Rate at the historically low rate of 0.5%. The low rate was intended to make borrowing more affordable and encourage spending during a period when the economy was struggling.
With the economy having picked up somewhat over the last 18 months, we’ve started to hear talk of a rise in interest rates. Many experts are predicting that the MPC will raise the Bank Rate around the turn of the year. The fact that Consumer Price Index (CPI) inflation picked up, albeit very slightly, last month only bolstered that talk.
The expectation now is that interest rates will rise before too long, but the Bank of England has been clear that any increase will only be implemented gradually in small increments. This should help to ensure that homeowners are able to adjust to any increase in mortgage repayments. For those thinking of buying, the best advice remains to ‘stress test’ your mortgage to ensure that when rates do return to more normal levels, repayments will continue to be affordable for you.