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Residential property sales in west central Scotland rose significantly in the first quarter of 2010 despite atrocious weather in the first few weeks, a delayed spring and now a looming general election.  But prices dipped by 3.0 per cent compared to a year ago according to the latest GSPC House Price Survey. 

The analysis for the survey is conducted independently by Professor Gwilym Pryce of the Urban Studies Department at Glasgow University and includes more transactions in the west of Scotland than any other index (with the exception of the Registers of Scotland).

Paradoxically, however, the dip in prices could be a sign of continued recovery in the property market rather than the start of a ‘double dip'.  According to GSPC Chairman, Michael Samuel, the apparent fall in prices could well be the result of a rise in sales:  "In the first three months of 2010 we have seen rising sales of homes that have been on the market for some time.  Until recently, these properties had been ‘stuck' on the market and so did not show up in the sales data.  Now that activity has picked up to the point at which they are selling, they are included in our results and are depressing average selling prices.  This is a result, however, of stronger, not weaker, demand.

"This would explain the many apparent contradictions we are currently seeing in the property market.  Sales are almost 14 per cent higher than over the same period last year yet selling times have, apparently, lengthened.  In some areas, properties are selling at closing dates for figures well above their Home Report valuation, yet average selling prices are lower.  Those contradictions only make sense when you realise that rising sales will include some properties that had previously proved difficult to sell".
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Professor Gwilym Pryce commented:  "The observed fall in average selling price is likely to be caused at least in part by the delayed adjustment in price expectations of those attempting to sell their houses over the past year, and may not indicate any new source of weakness in the market.  Although there are no signs of return to boom conditions any time soon, there are good reasons to expect gradual recovery of the housing market as the economy emerges from recession."

The average selling price across the region is now just over £130,000 compared to £134,000 at this time last year.  That puts average prices today at roughly 13 per cent below their peak at the end of 2007.  Selling times are, in fact, lower than they were last spring, 128 days today compared to 132 days in 2009.  But they are still higher than average selling times last autumn which fell to 84 days. 

In the last few weeks, new instructions have risen faster than sales - an indicator that homeowners are now ready to think about moving on and up.  Says Michael Samuel: "New instructions last year were thin on the ground as homeowners decided not to advertise their home in uncertain market conditions and not buy when prices were falling.  A recovery in instructions strongly suggests they believe that their existing home will sell successfully and that their next home will retain its value in the short term and grow in the long term.  Indeed, there is even a sense of urgency in some areas where buyers want to act now before prices recover further".  Overall, new instructions through GSPC firms are almost a third higher than they were 12 months ago.

New supply, however, is likely to put a cap on price growth in the immediate future.  One of the key features of the property market last year was a shortage of homes coming on to the market.  That helped to support prices at the weakest point for the market.  A recovery in confidence and an increase in supply will offer buyers more choice and so help to limit further increases in price this year.