Despite a sharp increase in sales, average property prices in Glasgow and the west of Scotland remain lower than they were at this time last year according to the latest market report from GSPC.
Sales between July and September were 17% up on the same time last year and 5% higher than in the previous three months. Selling times have also shortened and are now 16% lower than they were this time last year. Homes are now selling, on average almost three weeks faster than they were a year ago (95 days in 2013 compared to 114 days in 2012).
The marked improvement in sales has not, however, pushed prices higher. Average prices are now over 6% lower than they were at the end of September last year. Much of that decline happened at the end of last year and the early part of 2013, but improving market conditions have yet to lift prices. The average price of a property in west central Scotland is now £116,000, almost £8,000 lower than 12 months ago. Prices are now at the level last seen in early 2005, roughly 19% below their peak in 2007.
Professor Gwilym Pryce of Glasgow University, who analysed the sales data from GSPC, commented: “The west of Scotland housing market is not out of the woods yet, as the recent price falls indicate. But there are nevertheless signs that the market is on a longer term path to recovery. Most of the price fall reported here occurred in the last quarter of 2012 and the first quarter of this year, but the recent growth in sales is not reflected in rising prices. Indeed, it is possible that the increase in sales is partly triggered by sellers adjusting expectations to match market values”.
From my point of view, I think this illustrates perfectly that talk of a house price boom is fundamentally flawed. Sales and selling times have been steadily improving this year, but selling prices have yet to respond in most areas.
Despite the news on prices, however, there has been a sea change in the mood of the market. Buyers are more decisive and have increasingly decided that they will buy, rather than they might buy. Sellers have greater confidence that their home will sell. Mortgage availability is steadily improving.
In some areas demand has recovered to the point where typical properties in sought-after locations are being snapped up in a matter of days and there has been a noticeable increase in closing dates. Affordable family homes are in particular demand.
It will take a long time for the market to recover in terms of transactions or price and any change is likely to be patchy, with some locations experiencing better conditions long before others. Nevertheless, the signs are that we will see a steady improvement in the market from here on in.