It's no secret that in the wake of the credit crunch the
property market in Edinburgh, and indeed across the UK, changed
dramatically. As bank reined in lending, the number of homes
selling fell and house prices soon followed suit. Since that time
there has been no shortage of reports on the market but with
different reports providing often conflicting information, getting
a clear, concise picture of what's happening in the market is no
easy task. So, four years on from the start of the credit crunch,
where do we stand?
The first thing to note is that the number of homes selling
today is still below what would have been considered normal levels
prior to the downturn. In most areas the number of homes selling is
half what you would have seen prior to the credit crunch. At the
same time, the number of homes on the market is higher than you
would normally expect. In short, there are more people looking to
sell than buy and that's helped to bring prices down from the peak
levels reached in 2008.
The second thing to note is that, whilst nowhere has been left
completely unaffected by the downturn, we have seen something of a
two-tier market develop over the last few years. The market for
smaller homes has faced greater difficulty in large part because
the first time buyers who would previously have bought these homes
now have to save up bigger deposits. Conversely, demand for family
homes, particularly in more affluent areas, has remained
comparatively strong. As a result sales of smaller properties have
suffered most which is why we now see one-bedroom flats accounting
for 17% of sales in the Capital, down from 22% back in 2007.
What all of this means for you very much depends on what
position you find yourself in. First time buyers will be pleased to
see that house prices are becoming more affordable after being
priced out of the market by years of high inflation. On the other
hand, those who bought at the peak of the market and are now
looking to sell will probably find that the value of their home has
fallen making financing their move much more challenging.
2012 should see very little change in the market with both house
prices and the number of homes selling likely to be pretty close to
what we saw last year. This may not be good news for those hoping
for a return to the heady days of rapid house price rises but such
growth is rarely sustainable meaning and a period of stability is
probably in the best long-term interests of the market as it
continues its recovery.
(This article appeared in the Scotsman on 13th Jan.
2012)
