Hagglers bring down prices for city houses

Home buyers are cashing in on the housing slump in Edinburgh by haggling over fixed prices sales.
Almost two-thirds of all homes for sale in the Capital are now sold at fixed price. And of those, more than 60 per cent actually end up being sold for less.New figures show an average of only 13 homes a day were sold in Edinburgh last month, compared to 32 a day in August 2007.

The Edinburgh Solicitors Property Centre (ESPC) has also recorded the first fall in the average price of property in 37 years.

The average cost of a home in the city last month was £201,517, a year-on-year decrease of 6.5 per cent.

David Marshall, business analyst at the ESPC, said the rise in fixed price sales was an inevitable result of the market slowdown.

He said: “It is more enticing if the seller has a clear idea in mind of exactly what price they are after.

“If selling at ‘offers over’, some sellers will put a lower selling price to attract interest while others will put a property on at a higher price in the hope that they achieve a higher selling price. Fixed prices offer more clarity in a market where there are a higher number of sellers than buyers.”

Of the 400 sales in August, 243 were at fixed prices.

Last year, just 28 per cent of sellers of fixed-price homes accepted an offer below the original asking price. This had risen to 60 per cent by last month.

“It reflects the change in the market,” said Mr Marshall. “Demand is down and it is constrained by lending and affordability.

“Buyers are aware that sellers are facing increased competition from other sellers and are aware that, if their bid fails, there will be other options out there for them.”

And experts are forecasting that further price deflation of between five and ten per cent will be seen for the next 12-18 months, with the average price expected to dip well below £200,000 before the end of the year.

Ron Smith, chief executive of the ESPC added: “Typically it takes people much longer to respond to news that the market is cooling than it does for them to react to news of rising house prices, so the fact that we are already seeing evidence of this sort of change in behaviour is good news for the long-term health of the market.”

The Government announcement that the threshold for stamp duty is to be increased to £175,000 instead of £125,000 was designed to breath new life into the property market.

But property agents do not expect it to revive the Edinburgh market. Scott Brown, an estate agency partner at Warners, a member of the ELPG group of property solicitors, said that the announcement would help encourage those who have held back awaiting the new policy to now make a decision.

But he added: “Back in 1992 they raised the threshold to £250,000 and now, 16 years later, they have not increased it to the same limit.”

We put it on the market then.. nothing
Christina MacMillan, 28, and her husband Andy, 29, have had their two-bedroom house in Upper Craigour on the market since June 1.

The couple had the house valued at £155,000 but decided to put the house up at £140,000 fixed price for a “quick sale”.

She added: “We had one viewing on the Sunday after we put it on the market and then nothing.

“Eventually we dropped the price to £132,500 and agreed to pay stamp duty – which obviously doesn’t mean anything now as stamp duty has been suspended for all properties below £175,000.

“I called our lawyer today who advised us to keep the offer as it is and give the buyers some money, or drop the price again.

“Since we dropped the price we’ve had quite a few viewings but no confirmed buyers.

“Andy and I discussed it and if we don’t get any interest in the house by the end of the month then we’re going to put it up for rent.”

Source: Edinburgh Evening News, 3rd September 2008