GSPC Quarterly House Price Data 

HOUSE PRICE INFLATION SLOWS SHARPLY AS MARKET HEADS FOR PERIOD OF FLAT PRICES 

• House price growth slows sharply
• Selling times lengthen
• Average prices around £4,000 higher than this time last year
• No change in prices forecast for 2008

House price growth in west central Scotland slowed sharply in the first quarter of 2008.  According to the latest GSPC quarterly House Price Report, house price inflation across the region slowed to 2.8 per cent, down from over 10 per cent this time last year and eight per cent at the end of 2007.  This is the lowest rate of price growth since December 2000 when annual price growth was recorded at just 1.3 per cent. 

The average selling price of a home in the region reached just under £143,000, approximately £4,000 higher than 12 months ago and, like elsewhere in Scotland, house price inflation remains higher than for the rest of the UK.  The Nationwide's latest report, for example, puts UK house price growth at just 1.1 per cent.  Nevertheless, the signs are that the west of Scotland market is heading for a period of price stability with little or no change in prices this year.

Until recently, areas outside Glasgow had been more buoyant than the city itself, but there is growing evidence that the differential between Glasgow and non-Glasgow is rapidly diminishing.  House price inflation in the west of Scotland excluding Glasgow is now 6.3 per cent.  This is still more than double the rate of growth for Glasgow, but as the market slows, price growth in both areas are likely to converge.

As well as a slow down in house price growth, selling times have lengthened.  The average selling time is now 44 days, up from 41 days at the start of the year and well above the typical 29 day selling time recorded at this time last year.  However, selling times are still shorter than they were at the start of 2001 (55 days) and are exactly the same as they were at the start of 2005.   In both cases, selling times shortened again as interest rates fell.

The report was compiled with Professor Gwilym Pryce of the Urban Studies Department at Glasgow University who commented that:  "The market is definitely slowing and is rapidly approaching zero growth. What happens next depends as much on international capital markets and the word's central banks as it does on buyers and sellers locally.  Nevertheless, the Scottish housing market has traditionally been less dependent on mortgage debt and less susceptible to sudden price crashes. Also, the prospect of the Commonwealth Games could prove timely in offsetting downward pressures from the wider economy".

Commenting on the latest figures, GSPC Chairman, Michael Samuel said: "We have been forecasting broadly stable prices for the west of Scotland this year for some time.  Our prediction last autumn that prices would rise by around two per cent in 2008 was thought to be an underestimate by many but this now looks like a racing certainty.

"Having said that, the market has been busier in the first three months of this year than many of us expected, or feared.  There are more properties coming on to the market than at the same time last year and buyers remain active, although not at the levels we have seen in previous years.  Much of that demand is coming from price conscious buyers who see an opportunity to pick up a property at close to the upset price and sellers should bear that in mind.

"The big question mark at the moment is the availability of mortgage finance.  The demand is there and the credit crunch has had a limited impact so far.  But if even creditworthy buyers can't get a mortgage, that will have an impact on the market.  If that does happen, we would expect to see many sellers withdraw their homes from the market rather than sell at a lower price.  The Bank of England has said that it will make liquidity available to lenders.  It is vital for this market that it does so and that the lenders pass that on to buyers and movers. It is understandable that borrowers with a less than perfect credit history might find it more difficult to raise a loan, but the Bank must ensure that creditworthy buyers can get a mortgage when they need one'.

Glasgow: Average Price

Strathclyde: Average Price

Non-Glasgow: Average Price