Edinburgh’s property market is levelling out due to a growing sense of realism among buyers and sellers, according to the city’s leading property solicitor.
Warners believes that property prices across the country are likely to remain flat for the remainder of 2010 due to a combination of dwindling confidence among homebuyers, restrictive lending criteria and a surplus of properties being put up for sale.
The firm says that many would-be homebuyers in the Capital are being prevented from entering the property market due to tight mortgage restrictions imposed by lenders – and this is limiting further transactions along the property chain.
It also believes that buyers and sellers are now becoming more realistic about the prices they expect for their properties, which is keeping house prices level throughout the country.
Scott Brown, estate agency partner at Warners, explained: “Although some reports are suggesting that the property market in Edinburgh and the rest of Scotland is continuing to improve, the reality is that property prices and transactions are quite flat at the moment – and this is likely to continue for the foreseeable future.
“Lending is still a major issue at the moment, as the banks have tightened their restrictions on mortgage borrowing. Many first time buyers simply cannot afford the necessary deposit needed to secure a mortgage so they are choosing to rent homes instead – and this is stifling the property sales market.
“Confidence among buyers and sellers is also quite low at the moment. In Edinburgh, many public sector and financial workers are choosing to sit tight until the economic climate improves rather than looking to move along the property ladder.
“I believe it is highly unlikely that confidence will return until the economic climate improves and people are satisfied that their jobs are safe – so it could be some time before we start to see any further recovery in the property market.”
Scott adds that there is also a surplus of properties currently for sale in the city, which is contributing to keep house prices level.
He said: “The supply of property has been gradually increasing over the past year – thanks, in part, to a surge of confidence at the start of 2010 when reports suggested the recession was ‘over’, many people saw that prices had stabilised and decided to put their homes up for sale to take advantage of the more favourable market conditions.
“However, this has merely led to a situation where there are far more sellers than there are buyers. For example, earlier this year espc.com had approximately 7500 properties listed for sale – but this figure now sits a shade under 10100. Supply is outstripping demand in the local market and when this occurs, there are two possible outcomes – prices falling and the market slowing.
“My own view is that there's about 20 per cent too much property on the market and that is a cause for a slowing of sales and slight price falls. I believe that trend will continue in the short term.”
However, despite the current market position, Scott believes that there are still positives for buyers and sellers – provided that they remain realistic in their expectations.
He adds: “Pricing a property correctly and fairly is absolutely key to achieving a sale. Many sellers have been too bullish in the past over how much they expected for their properties – and the result was simply that their homes languished on the market for months.
“Properties for sale at the wrong price simply cause extra administration for the agent and leave a dissatisfied client at the end of the day. Too many people still ‘twist the surveyor's arm’ to get a higher asking price, but this often means that after a period of time the price gets reduced anyway. Agents need to be careful – work closely with the surveyors – and pitch prices sensibly.
“However, the positive news is that there are an increasing number of people who are being more realistic over their expectations when it comes to property. While this is keeping house prices relatively stable, it also means that sales are still being achieved – which is good news for the country’s property sector. At Warners, we have sold just under 500 properties so far this year, which shows that sales can be achieved with correct and sensitive pricing.”
Warners, which has four property shops in Edinburgh, has been the Capital’s leading property solicitor in terms of property sales and listings for the past 11 years.