Housing market slump sweeps Capital

New authoritative data shows that there are huge disparities in the fall in prices seen in different postal districts of the city. Among the worst hit areas was EH14 – which includes Currie, Juniper Green and Corstorphine, where the price of property has plunged by nearly a quarter since the downturn started to bite in the second half of 2007.

Within postcode sub-regions, of those that had a large enough sample size to allow for a fair comparison, EH14 1 – Craiglockhart – saw the biggest fall in prices, with homes selling for 82,500 less, on average, than 15 months ago.

Yet the prestigious EH3 postcode area, which includes the West End and Stockbridge, has so far escaped the credit crunch relatively unscathed, with average prices declining by only two per cent, or 8500, since the peak of the city's property boom.

Property agents say that areas with huge family homes have seen extremely sluggish sales as, if an average expected decline is around ten per cent, sellers are not willing to accept six-figure sum reduction in prices.

Parts of the city with large proportions of new-build, such as EH6 – which includes large parts of Leith – have also seen prices hit hard.

Simon Rettie, managing director of Edinburgh-based Rettie & Co, which compiled the data from an analysis of Land Registry sources, said: "The number of big homes sold has declined most. For a 1.5 million house, if it goes down ten per cent then that is 150,000. There is no hiding from the fact that is a very big drop.

"Some areas are doing better. There is still a lot of demand for areas like EH3, where there are a lot of good central flats at the 200,000-500,000 mark.

They are still in demand in places like Stockbridge, Comely Bank and parts of the New Town.

"Location is everything and those central areas will be the last to go down and the first to rise."

He said many areas with a lot of new build properties had suffered worst, particularly when they are on development sites that have not been completed.

"A lot of new-build has been severely affected and there are probably more marked reductions than other types (of property).

"There is a problem if a house being sold is on a new-build development that isn't completed. If a developer is selling at one price and you are at another then you have a problem."

Although some districts – such as Cramond (EH4 6) and Inverleith (EH3 7) – saw an even bigger decline in selling prices than Craiglockhart, the number of sales fell below 20 in the final months of last year – so low that they would not allow an accurate and fair comparison. Equally, EH2 sales fell by 76 per cent in the last 15 months but there were only four sales in the last three months of 2008.

Separate data compiled by Rettie also reveals that, of those properties advertised for sale in January, three per cent of sellers reduced the price while their home was on the market.

Such a move is seen as a sign that sellers have had difficulty gathering genuine interest in a property and instead reduced their expectation.

Of those that reduced prices, the biggest decrease was in the EH2 area, where the average originally listed price of 272,500 was taken down to an average dropped price of 252,473 – a 7.6 per cent decline.

Willie Hunter, a director of Edinburgh Solicitors' Property Centre and partner-in-charge at Hunters Residential, said the price changes are partially influenced by sellers modifying expectations.

He said: "People are reducing prices and continuing to be very realistic with prices.

If a property is priced well and sensibly you will still generate competition and be able to set a closing date."

The ESPC saw the number of new properties coming on to the market decline by 75 per cent last month and there are now around 3800 homes available for sale in Edinburgh and the Lothians, 1000 below this time last year.

Mr Hunter said: "If we are going to be witnessing redundancies being made there is inevitably going to be an increase in forced sales, or people cutting losses and getting out, but the vast majority we are putting on at the moment – around 80 per cent – are still those who want to buy another property.

"There are also more saying they want to downsize, tighten their belts and look at something smaller, and they can do that knowing that, although they might not get as much as they would have once got for their property, they won't have to pay as much for a new property."

Leslie Deans, a member of the ELPG group of property solicitors and senior partner at Leslie Deans & Co, said almost all deals were now being negotiated rather than going to closing dates.

He said: "Every area has suffered. Nowhere has been exempt, from the wee starter flat in Westburn, Sighthill or Craigmillar at 100,000 to the top of the market in the best streets of the Grange, Morningside, Barnton or Cramond. Nothing has escaped."

He added that some of the figures – such as those in Craiglockhart, Greenbank, Leith and east Craigentinny, may have been impacted by few sought-after "good quality Edinburgh bungalows" becoming available.

"There is always a lot of demand for them but there's not been many of them available, he said.

"It will be interesting to see now, as the market picks up, if there is a resurgence of these types of properties."