● House prices in Scotland’s most populous region 4.9% lower than a year ago
● Sales maintain momentum
● Selling times shorten
House prices in Glasgow and west central Scotland – the most populous area in Scotland – fell in the first three months of 2013 and are now almost 5% lower than they were a year ago. Sales, however, remain relatively robust – up 6.5% in the last 10 weeks – and selling times are down by a quarter compared to the same time last year.
The average selling price in the area is now £115,000, down almost £6,000 over the last 12 months from £121,000 a year ago. Average property values are now broadly back to where they were at the start of 2005.
Selling times, however, have fallen from around six months this time last year to four and half months today. And, after a slow start in January, sales in the last 10 weeks have regained momentum and are now ahead of the same period last year. A combination of lower prices and faster sales suggests that sellers have decided that moving is more important than holding out for top dollar and have adjusted their price expectations accordingly.
According to Professor Gwilym Pryce of Glasgow University, who analysed the sales data from GSPC: “It is unwise to read too much in to the results for any individual quarter. Nevertheless, it seems as though the Scottish housing bubble has not burst but is gradually deflating. The decline has been exacerbated by continuing economic stagnation at home and across Europe. At some point, prices will bottom-out. Meanwhile, if you’ve got the cash, houses are becoming more affordable than they have been for nearly a decade”.
From my perspective, the combination of lower prices and faster sales suggest that sellers have come to terms with the new market realities and are now determined to move, even if it means accepting a lower price for their home than they had originally hoped for. Given that the purchase price of their next home is also likely to be lower, that probably makes sense.
But it takes two to tango and there is growing anecdotal evidence that buyers are also becoming more decisive. We have seen an increasing number of closing dates, a rarity until very recently. Buyers who have been ‘playing the field’ are now ready to commit – provided the price is right.
The recovery in sales that started last autumn seems to have continued in to the spring. Given that early 2012 saw a sharp increase in activity, the fact that sales in recent weeks have been better than they were then is very encouraging.
Last year, that positive start came to an abrupt halt amid renewed concerns about the future of the Euro which sent mortgage lending into reverse. With Funding for Lending in place and Help to Buy due to be launched in nine months’ time, that seems less likely this time round.
Although the headline figures on selling prices look weak, there is growing evidence of an underlying improvement in market conditions.