House sales slump but prices 'will stay steady'

New sales statistics released by The Edinburgh Solicitors Property Centre (ESPC) show that, despite a year-on-year increase of 2.6 per cent, taking the average selling price to around 233,000, the volume of sales saw a big drop in the second quarter of this year.

The figures have caused experts at the ESPC to revise their growth predictions released just six weeks ago. David Marshall, ESPC business analyst, said he now expects the housing market growth in Edinburgh to shrink to zero per cent by this time next year.

He added: "The risk of a downturn in average house prices in the next 12 months is now greater than this time last year, given the constraints on disposable income coming from rising food and oil prices, coupled with a predicted rise in interest rates and a lack of available credit."

According to the latest figures the average selling price of a property in the Capital rose by 2.6 per cent annually, though this came in the face of a downturn of 36 per cent in the number of sales.

The ESPC said the reduction in demand for property was particularly evident towards the lower end of the market, where restrictions on credit availability hit hardest.

House prices in the Gorgie/Dalry area have seen a fall of 3.7 per cent, while two-bed flats in Stockbridge rose in value by just over six per cent.

Mr Marshall said the figures showed it was "a buyers' market for those who are able to secure credit". He added: "As more properties come on the market, buyers feel less pressure to buy the first decent property they come across and will subsequently have greater confidence to put in a lower bid than before.

"At the moment, we've seen no evidence that sellers are feeling the pressure to accept these lower bids, but as more and more properties come on the market and competition increases, their expectations may begin to fall."

The ESPC has already recorded a drop in premiums – the difference between the "offers over" asking price and the final selling price - from 28 per cent last year to 23 per cent.

With inflation expected to hit four per cent and the cost of living on the rise, sellers may soon be forced to sell their properties at a reduced figure sooner than predicted.

According the ESPC report, the average price of a four-bedroom detatched property in the suburbs rocketed by almost 20 per cent.

Large family homes are traditionally the preserve of second or third-time buyers, who already have a significant amount of equity to put towards new properties.

ESPC chief executive Ron Smithsaid: "From the sellers' perspective, it is likely they will have to moderate their expectations on the price their property will attract. The flipside of this is that they should be able to secure their next property for a lower price than they may have anticipated.

"Although most looking to move would be best advised to sell before they buy in the current market conditions, it is wise to start viewing potential purchases early to get a better idea of how much you will have to bid and be in a position to move quickly when you sell your current home."