A local mortgage broker specialising in the needs of first time buyers, Â FirstMortgage, has today said that growing demand continues to outweigh supply in prime parts of the Scottish capital. Experts at the established brokerage have claimed that a combination of government led schemes such as Funding for Lending and rising employment opportunities has attracted an increasing number of first time buyers to the city, where competition for prime properties remains at an all time high.
According to the latest figures from the BBC, the average house price for the period of April to June 2013 in Edinburgh was £212,895, which was a 3.4% drop in the annual average, but a 4% rise on the quarter. A total of 2,259 properties were sold in the same period. Between May and July, the Edinburgh Solicitors Property Centre (ESPC) recorded a 24.1% rise in the annual sales for property bringing the market to the highest level since 2008. There was also a rise of 5.1% in the number of properties coming onto the market.
Ian McGrail, Managing Director of FirstMortgage says, ‘The Funding for Lending scheme has been very successful in stimulating the housing market this year. Enquiries to our Edinburgh office have reached an all time high, as mortgage finance remains significantly more accessible for first time homeowners with rates continuing to fall to their lowest level since before the financial crisis. We have reported a sharp increase in the level of new business we have written this year and have been able to help a record number of first time homeowners gain access to homes in Scotland’s vibrant capital city.’
McGrail added, ‘However, supply of new, affordable housing still remains an issue and therefore we encourage local construction and building firms to help us satisfy growing demand with a more constant supply of new homes.’
The improved standards for Building Regulations, however, are making it harder for up to date houses to be built at an ‘affordable’ price with purchasers and some lenders either unable or unwilling to act on the long term value of investing in energy saving measures.
But other factors besides the cost of the house itself weigh in. With competition for places in the most popular schools increasing*, new research¹ from Nationwide Building Society shows that nearly a quarter (23 per cent) of UK parents of children aged 5 to 16 years would move and be prepared to pay between two and 10 per cent extra on the price of their new home to be in the catchment area of a better school.
Nonetheless, Mark Hendrie, Partner at local solicitors, Boyd, says, ‘The property market in Edinburgh has made a strong comeback in the last six months and we have turned a corner and returned to a stronger market. Closing dates for offers are back and many properties sell within days of coming on the market, with most now selling above their home report value. Following the credit crunch it seemed closing dates were a thing of the past, however, the majority of the properties which I have submitted offers on for clients are at a closing date. Prices in some areas are also returning to those we were seeing pre-recession, and there seems to be a rush to get on the property market before prices run away again.’
He continued, ‘As a result of a lack of supply and growing demand, purchasers in prime areas are often paying over the Home Report valuation by a substantial amount. We are quickly running out of stock and family homes selling in the region of £250,000 to £500,000 are particularly scarce.’