● Average selling prices inScotland’s most populous region 1.8% up on a year ago
● Sales improve but prices slip back in final months of the year,
● Selling times shorten
House prices in Glasgow and west central Scotland – the most populous area in Scotland – slipped back in the final three months of 2012 (down by 1.5 per cent), but still ended the year 1.8 per cent higher than they started it. The average selling price in the area is now almost £127,000, up from £124,500 a year ago, but approximately £2,000 lower than the £129,000 reported at the end of September.
Sales in the final quarter, however, were stronger than expected, up by over 10 per cent compared to the same time last year. It is the first time that GSPC has recorded more sales in the last three months of the year than it did in the third quarter.
Selling times – a key indicator of market conditions – have shortened by almost 10% compared to the same time last year, down from 145 days a year ago to 132 days now. Even so, the average property still takes over four months to sell.
Over the last three years, selling prices have fluctuated from one quarter to the next, but the overall effect has been little or no change. According to Professor Gwilym Pryce ofGlasgowUniversity, who analysed the sales data from GSPC: “Annual house price inflation inGlasgowand the surrounding areas over the past three years has continued to hover around zero, with no obvious upward or downward trend. Assuming no major positive or negative shock to the wider economy, the outlook is likely to remain broadly the same for the foreseeable future”. Selling prices now are almost exactly what they were at the start of 2010, although they remain around 12 per cent below their peak in 2007.
From my point of view, I think it is becoming clear that we attach too much importance to minor movements in price and not enough importance to the health of the market as a whole. Prices are no longer the key indicator of how the market is performing. The first signs of a recovery in the market will not be a rise in prices, but a sustained increase in the number of transactions. Any changes in price will come later.
In that context, the recent improvement in sales is encouraging. This is clearly not a ‘spring bounce’ and happened at a normally slow time of year. But we have been here before. Sales started strongly in 2012 and withered away partly because bad economic news hit confidence, but largely because mortgage lenders tightened their lending criteria which throttled demand. If this improvement in transactions is to continue, the economy has to avoid another major setback and lenders must at least maintain the gradual improvement in mortgage availability we have started to see.