Property Market Highlights
- Property Prices & Sales Fall Slower in Scotland Compared to Rest of UK
- Average Selling Price Dips Across Key Scottish Areas as Lower-Value Properties Flood the Market
- Buyers Continue to Snap Up Properties
- Interesting trends emerge in how buyers are funding their purchases
Property Prices & Sales Fall at Slower Rate in Scotland Compared to Rest of UK
The rate at which average UK house prices and sales are falling has eased in the past month, according to Scottish Building News, which reveals that surveyors are more optimistic about the short- and long-term future of the property market than they were previously.
The latest findings from the Residential Market Survey by the Royal Institution of Chartered Surveyors (RICS) found that while Scottish house prices fell over October (a net balance of -5%), this remains a significant improvement on the -18% and -17% figures recorded in September and August, respectively. Moreover, Scotland’s price balance continues to be in a more robust position compared to the overall UK figure of -63% – demonstrating the endurance of the market north of the border.
Corroborating these findings, the most recent Halifax House Price Index reports that while all UK nations experienced an annual decline in average house prices in October, Scotland was the most resilient – down just -0.2% annually, with properties now costing an average of £202,608. By contrast, the greatest fall was seen in South East England, where prices dipped by -6.0%, followed by Wales at -3.9% and finally Ireland, which enjoyed similar results to Scotland with a decrease of just -0.5% annually.
Average Selling Price Dips Across Key Scottish Areas as Smaller-Value Properties Flood the Market
According to the latest data from ESPC, the average property price across Edinburgh, the Lothians, Fife, and the Borders dropped by 7.4% year-on-year between August and October 2023, hitting £275,762. Given the current climate of economic uncertainty, including high interest rates and a decrease in competitive mortgage products, these figures align with the trends seen over the past few months.
However, as ESPC surmises, the latest dip in average property prices can be attributed to the Scottish Government’s recent legislation changes for short-term lets, which have led to an influx of smaller, lower-value homes flooding the market as landlords leave the rental business. With this in mind, it’s easy to see how this month’s figures could be attributed to an increase in small flats and one-bed properties getting snapped up as opposed to any actual reduction in the value of the Scottish market.
The most significant descent in average selling prices between August and October this year was recorded in East Lothian (13.8%), followed by the Borders (11.6%), then The City of Edinburgh (14.8%) and finally Dunfermline (6.9%).
Commenting on these figures, Haley Mackay, MOV8’s Property Sales Manager, said:
“In the first 6 months of 2023 we saw monthly viewing figures in excess of 300. This dropped dramatically in July 2023 and has remained steady at between 220 and 240 since then. The number of Closing Dates that we have been handling per month has also fallen as the year has progressed. Both of these things indicate that there is less competition between buyers.
“The percentage that we are achieving versus Home Report Valuation has also dropped. This is not surprising against a backdrop of prices softening, particularly as at the peak of the market it was not uncommon to be achieving an average of 7% above Home Report valuation.
“The most popular property type in Edinburgh City Centre certainly seems to be 2 bedroom flats. In The Lothians and Fife, the most popular property type is a 3 bedroom house.
“The reduction in competition between buyers has led my Property Sales Team to be hugely proactive in reaching-out to our selling clients and ensuring that our advice matches their priorities.
“Whereas, a couple of years ago, it was common to put your own property on the market after securing a purchase, with “Subject to Sale” offers commonly being accepted, the increased length of time that properties are on the market now means that some sellers are having to make compromises between speed of sale and the sale price achieved. Put simply, for many properties, the right buyer will come along at the right price but it will take longer to achieve than it did a year or so ago.
“If at all possible, we would recommend that our clients achieve a sale first before committing to a purchase. This means that they can wait that little bit longer until the right offer comes along and be in a much stronger negotiating position on their purchase.”
Buyers Continue to Snap Up Properties
Turning the tide of the post-pandemic years, we see that buyers increasingly hold greater purchasing power as affordability and a desire to secure their next home at a fair price lead to more cautious bids. It should be noted that the figures below relate to sales completing between August and October 2023 with offers having been made and accepted significantly earlier in 2023, reflecting buyer sentiment before further interest rate rises in 2023.
According to ESPC, properties across Edinburgh, the Lothians, Fife and the Borders achieved 103.2% of their Home Report Valuation (HRV) at sale between August and October 2023 – 4.5 percentage points lower than last year. The biggest decline was felt in East Lothian, where properties achieved 104.1% of their HRV at sale (6.9 percentage points lower year-on-year), followed by West Lothian at 100.3% (6.6 percentage points down) and finally, West Fife & Kinross, where properties achieved on average 103.4% of their HRV at sale (a decline of 3.7 percentage points annually).
While it seems the days of properties significantly exceeding their Home Report Valuations (HRV) are currently behind us, it’s heartening to see that the majority of homes continue to sell for over their HRV at sale. This month’s figures highlight a natural stabilising of the market and may be good news for buyers who can enjoy more choices at a fairer price.
MOV8 Releases Figures Indicating Interesting Trends in Purchase Funding
MOV8’s Senior Compliance Analyst, Jessica McGovern, has been crunching the numbers and uncovered some interesting trends in the way that property buyers in Scotland are funding their purchases.
“From November 2022 to November 2023, we have seen some significant changes in the way that buyers are funding their purchases. The proportion of buyers using “Gifted Deposits” has increased from 23.4% to 27.5%. This is almost certainly because of the increasing challenges for buyers within the mortgage market. We have also seen more clients using multiple gifts from various individuals to fund their transaction, all of which can add complication and delay when verifying the Source of Funds.
“The proportion of buyers using Crypto to help to fund their purchases has risen from 0% to 2.5%. Overseas nationals also make up a greater percentage of buyers, going from 1.51% to 5%, year-on-year. There has been a noticeable increase in the use of cash deposits of more than £1,000.”
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