The latest LSL Property Services/Acadametrics survey indicates Scottish residential real estate prices slipped 0.9% in January, largely due to a fall in the value of flats across the country. Flat prices dropped 8% while every other property type saw values increase, with the greatest declines occurring in Orkney (16.9%), Dunbartonshire (13.6%) and East Lothian (9.9%). Experts believe it is the absence of new buyers in the market due to difficulties in securing a mortgage that is driving down prices as sellers respond to waning demand. For more on this continue reading the following article from Property Wire.
Average property prices in Scotland fell 0.9% in January and are now £2,816 lower than a year ago, according to the latest LSL Property Services/Acadametrics survey out today (Wednesday 14 March).
On an annual basis prices have declined by 1.9%, leaving the average price of a property at £145,607, a level last seen in December 2009.
With the exception of June 2011, this is the largest monthly fall since March 2009. There was an 8% drop in flat prices which the company says reflects a slow first time buyer market. House prices actually increased.
The largest annual price fall was in Orkney where prices were down 16.9%, followed by West Dunbartonshire with a fall of 13.6% and East Lothian down 9.9%.
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East Renfrewshire and South Lanarkshire saw prices fall by just 0.3%, Perth and Kinross by 0.4%, Fife and Dundee by 0.6%, and North Lanarkshire by 0.7%.
In Edinburgh prices fell by 3.4% but the capital city still has the highest average prices at £208,675. Aberdeenshire has the second highest prices at an average of £197,327, down 1.6%, and in Aberdeen itself they are £180,489, down 1.5%. In Glasgow prices have fallen annually by 2% to £129,633.
‘Upon closer examination, it becomes clear that the monthly fall has been mainly a result of a reduction in the average value of flats. All three other property types saw price rises in January. Flats made up approximately one third of all property sales in the month, with Edinburgh and Glasgow accounting for 40% of the market for flats,’ said Peter Williams, housing market specialist and chairman of Acadametrics.
He said that agents have been reporting an increase in the number of properties of all types coming to the market. With buyers less in evidence, sellers have been reducing their asking prices in order to secure sales.
‘The result was that January 2012 total sales were up 7% on January 2011. Although the average price of a flat fell by 8% from the December level, flats comprised one of the strongest sectors of the January property market,’ he explained.
Richard Sexton, director of e.surv chartered surveyors, said that house prices usually fall over the winter months as would be buyers nurse their finances back to health after Christmas. ‘But this is bad news even compared to this time last year. The average house is now worth almost £3,000 less than in January 2011. That’s not to say people aren’t still keen to move home. The root of the problem is how hard it is to get a mortgage. Banks just aren’t lending, and that is acting as a foot on the windpipe of the housing market. Indeed, loans for home movers crumbled by 10% in the last quarter, with first time buyers hit particularly hard by the mortgage drought,’ he explained.
‘The 8% drop in flat prices, typically bought by first time buyers, is a tell tale sign of a struggling market. The dwindling number of new buyers at the bottom of the market has choked off activity in the higher echelons of the property ladder. This is forcing sellers to slash their asking prices and is stymieing any chance of prices rehabilitating to their previous highs,’ he pointed out.
‘In the longer term, any concerted rise in transactions will be inexorably tied to the outcome of the European financial crisis, because it will affect banks’ and building societies’ ability to inject more funds into mortgage lending. There also must be concern that the will they/won’t they Independence issue will cause inwards investors to pause, whilst uncertainty exists, with a possible knock on effect for the economy and housing market as a result,’ he added.
This article was republished with permission from Property Wire.