Registers of Scotland(RoS) made the headlines this week with news that sales of residential property were at the lowest level ever recorded and that average selling prices had dipped by 2.3%. You can see their report here.
But the results shouldn’t have come as a surprise on either measure. And I’m betting that the next set of results will show a recovery in prices and a further decline in transactions.
It’s all about timing
How so? It’s all about timing. Registers of Scotland reports transactions at the point when the transfer of ownership takes place. But others, who report on the market, including GSPC, record a sale when a property is no longer being advertised because a sale has been agreed.
That usually happens, of course, some time before the new owner moves in. So, the transactions that RoS records as happening between July and September this year were probably the result of offers being accepted in May to July.
That means that what we and others report in one quarter is picked up by the Registers of Scotland in the following quarter. In quarter two this year (April – June) we reported that prices were up on the previous quarter but down on the previous year by 2.4%. That is almost exactly what RoS reported for the third quarter this year (July – September).
Since then, we’ve issued our results for the third quarter of this year. You can see them here. They suggest that prices in west central Scotland are roughly 3.6% up on the same time last year. If that’s right, you can expect the next report from the Registers of Scotland for the fourth quarter of the year to conclude that prices are higher than they were at the same time last year. Mind you, the change in prices from one quarter to another (rather than compared to the pprevious year) will be marginal.
What about transactions?
A key element of the reports from RoS are the data on the total number of sales per quarter. Until August, RoS had been reporting that transactions so far this year had been higher than the year before. You can see the full data series going back to 2004 in our ‘Stats File’ here.
Again, this reflects what was happening earlier in the year when there was, indeed, a sharp increase in sales. But transactions reverted to broadly the level of the previous year before the summer holidays. Only recently has that become evident in the figures from RoS. Moreover, the next two quarterly reports are likely to record weak sales (they will be reporting on offers made in the second half of this year), even if sales pick up in early 2013.
The importance of the data from the Registers of Scotland is that they provide the only truly definitive record of what has happened in the property market. But the time lag between accepting an offer and taking ownership is such that the results tell us what has happened rather than what is happening.
For a more up to date view of the market, you will do better to look at reports from your local Solicitors Property Centre. Their data is closer to what is happening in the market now and, with high market shares across the country, they are likely to have better data than any of the lenders.