Only way is up for Edinburgh house prices, say experts

EXPERTS predict Scotland's capital will see a return to the days of annual house price rises – despite another month revealing the depth of the property slump in the city.

Although the average house price in the capital is continuing to rise – and is well above the average figure notched up for the first two quarters of 2009 – it is still some 13.5 per cent down on this time last year.

But the Edinburgh Solicitors Property Centre insisted on growing signs of optimism, on the back of the highest number of house sales since June last year, and the fifth consecutive month of increased sales.

Edinburgh has seen annual falls in house prices every month since August of last year as the credit crunch has bitten. Latest ESPC figures show that the average price of a house sold in Edinburgh was 212,174 in July, compared to 245,415 a year ago.

But last August saw prices slump by 6.5 per cent year-on-year and the market in the capital suffered a dramatic slump thereafter, with the average price dipping below 200,000 by the turn of the year.

Since then, ESPC insists the market has shown increasing signs of stability, although it has cautioned against expectations that the city will enjoy a return to the days of the property boom any time soon.

The average house price in Edinburgh for the first three months of the year was 198,895, while April-June saw the figure jump to 207,890. The average time to sell a house has dropped from 22 weeks in February to 17 weeks last month. ESPC noted 506 sales last month, against 427 in June.

Ron Smith, chief executive of the ESPC, said: "July has seen a continuation of trends witnessed so far in 2009.

"Prices have remained stable and the number of homes selling has been increasing since February. Prices are typically around 10-15 per cent lower than at the peak of the market and this, coupled with historically low interest rates, has attracted a number of buyers back to the market.

"There is now a strong likelihood that we will see an annual increase in the average house price before the end of the year. "

ESPC chairman Robin Stimpson added: "There are two main factors at work. The number of properties available has fallen by about 50 per cent, meaning sellers are facing less competition, putting them in a stronger negotiating position.

"In addition, we are seeing sellers becoming more realistic in setting their asking price. There is some suggestion Home Reports have helped in this regard, with asking prices being set at, or close to, the valuation level. The overall picture is one of continued improvement in the market."