House prices rise £2,000 in three months
Average selling prices 4% up on the same time last year
Detached houses see greatest gains
Selling times lengthen
Average house prices in Glasgow and the west of Scotland rose by more than £2,000 in the first three months of 2015 to reach just over £125,000, up 4.1% (£5,000) on the same time last year. The return to growth, however, only partially reverses setbacks recorded in the second half of 2014 (see graph and table) and longer selling times suggest that the pace of growth is unlikely to accelerate in the near future.
While average prices across the board rose by 4.1%, some property types did better than others. Detached houses saw the greatest gain, rising by over 11% in the last year while flats recorded the smallest rise in price at 1.5%. Nevertheless, average prices remain 13% (over £16,000) below their 2007 peak.
Selling times lengthened by 13 days compared to the start of last year (up from 105 days to 118 – roughly 12%). While selling times in the first quarter are traditionally longer than at other times of the year, the increase in the number of days on the market suggests that the sharp increase in demand seen this time last year has slowed. That said, there were marked local differences with a shortage of supply in some of the most sought-after areas – notably parts of East Renfrewshire and East Dunbartonshire – and sales above home report value becoming increasingly common in popular locations such as the west end of Glasgow.
According to Professor Gwilym Pryce, Director of the Sheffield Methods Institute at Sheffield University, who analysed GSPC’s sales data: “Prices rose by 4.1% over the past year, making it the fifth quarter in a row that annual house price inflation has been positive. Nevertheless, the recovery is gradual and tentative. Lengthening selling times, for example, are in marked contrast to the relatively steep decline in the number of days it took to sell a property in the previous recovery. In short, house price inflation in the West of Scotland continues to trundle upward, but with just enough fragility to deter us from gambling our livelihood on it”.
What of the future? Well, we start this year with prices somewhat higher than they were a year ago and there is a realistic prospect that values will rise beyond the post-recession peak recorded last year in the next few months
Having said that, the new constraints on mortgage lending which have seen approvals dip in the last few months will almost certainly prevent a return to rampant house price inflation. There may also be some hesitation in the market in the run-up to the general election and perhaps a pause at the top end of the market following the introduction of the new Land & Buildings Transactions Tax. There remains a lot of ‘spare capacity’ in the market with home owners nervous about moving and transactions remain below what might be considered ‘normal’. While the market is gradually recovering, it will take a long time to return to health.