House prices lower in final quarter of 2010
House prices in the west of Scotland fell by 3.8 per cent in 2010, after a weak final three months of the year pushed prices lower. Selling times also rose marginally, from 90 days in the third quarter of 2010 to 94 days by the end of the year.
The latest GSPC property market report, based on an analysis of sales data by Professor Gwilym Pryce of the Urban Studies Department at Glasgow University, includes more transactions in the west of Scotland than any other index (with the exception of the Registers of Scotland).
The property market took a rollercoaster ride last year. A strong recovery in demand and a shortage of supply in the first half of the year sent prices sharply up, rising by £9,000 in the spring and early summer. But low mortgage availability throttled demand and a substantial rise in the number of homes for sale meant that supply greatly exceeded the number of purchasers with access to a mortgage. Atrocious weather in the last few weeks of the year brought the market to a premature halt.
Overall, average prices ended the year around £5,500 lower than they were at the start of the year, falling from £133,500 at the end of 2009 to £128,000 today. Prices in the region peaked at £149,000 at the end of 2007 and have fallen back by around 14 per cent over the last three years.
Despite a softening in prices recently, Professor Pryce is not anticipating a further sharp decline in prices. He said: "The West of Scotland housing market will likely remain jittery for some time, with no immediate prospects of either a strong recovery or decline. Looking at the decade as a whole, prices appear to have reached a plateau at broadly the level seen at the start of 2006. Nevertheless, house price growth is likely to remain stilted until the labour market and broader economy pick up".
GSPC Chairman, Michael Samuel, concurs: "We know from very recent experience that the response of sellers to adverse market conditions is to sit tight and wait. We saw that happen in 2009 when sellers either refused to put their homes on the market or declined offers below what they thought was acceptable. That could well happen again. The Royal Institution of Chartered Surveyors is already reporting as fall in instructions south of the border and that trend is likely to be seen here too. As a result, we expect broadly stable prices but a very low level of transactions. We could well see fewer transactions this year than last and sales in 2009 were half of previous levels.
"The sudden rush of homes coming on to the market in the first half of this year was strong evidence that people want to move if they can. Most sellers are also buyers and so more homes for sale should mean more transactions and more movers. The fact that this did not happen is very largely down to a severe shortage of mortgages together with an understandable desire to sell before you buy. We don't expect to see lending improve significantly this year, but when it does, there will be substantial pent up demand from homeowners who have postponed their move in the light of market and lending conditions".