Average cost of Capital home rises to £245,000

THE average house price in Edinburgh has risen 7.4 per cent in the last year, with higher value homes propping up the market as the price of one-bedroom flats virtually stalls. New year-on-year figures for the month of July show the average Capital home will now set a buyer back £245,415.

At the same time, the average one-bedroom flat has risen just 0.4 per cent in the past year to £141,597.

As the credit crunch continues, first-time buyers and buy-to-let investors are dropping out of the market, leaving small properties increasingly hard to shift.

This time last year the value of a one-bed flat had shot up 17 per cent in a year. But an increasing proportion of high-value large homes on the market means the average price is still rising.

Gillian Black, partner at solicitors’ firm A & WM Urquhart, said the situation was the worst she could remember. “The last time it was this bad was before my time. I started in the early 1990s and I imagine that, in Edinburgh, probably the last time it was as bad as this was before that,” she said.

“It’s difficult to predict what’s going to happen – I’m not expecting very much to happen this year and I imagine that we could be looking into some time next year before we get back to normality.

“Even then, we’re not going to see these premium Edinburgh prices.”

She said that the drop in the market for smaller properties was a direct result of the credit crunch, and was hitting sales of the smallest properties the hardest.

“Borrowing is a problem and first-time buyers are finding it difficult. They’re having to find bigger deposits and don’t have resources, and the investors are disappearing,” she added.

“We normally see the same developers noting interest in doer-uppers, and recently they’ve stopped even doing that.”

The figures were published by ESPC, and the company’s business analyst David Marshall said:

“The number of properties on the market this time last year was just over 4000 – now we’re looking at 6300.”

Meanwhile, the number of homes sold has halved, with 1156 completed last July and just 503 in the same month this year.

The number of properties being sold at a fixed price has also increased. Traditionally, a third of homes on the market were advertised as fixed price, but that has now risen to 60 per cent.

Also, 60 per cent of properties offered at a fixed price went for below the asking price.

‘Last year my flat would have sold in a week’MIKE STOANE, 41, runs a lighting design company, and is trying to sell his former home, a one-bedroom flat in Graham Road, Bonnington.

He has twice dropped the price of the newly-decorated flat, which has views of the Castle and Calton Hill, and has shown 20 potential buyers around without any of them making an offer. He said:

“I was going to put it on the market (last August], but I had someone say they’d like to rent it out for six months so I held off.

“It turned out to be a really stupid idea because the property market collapsed.”

The house was initially on sale for offers over £99,000, with Mr Stoane hoping to receive £135,000.

He dropped the price first to £125,000 fixed price and is now asking £115,000 fixed price.

He added: “It’s been on the market for two months now, whereas this time last year I think it would have sold in about a week.”

Source: Edinburgh Evening News, 13th August 2008