Murray Beith Murray Residential Property Manager, Iain Ogilvie writes in The Scotsman today. Read the full article below, republished by kind permission of The Scotsman:

Bad news has a habit of multiplying – just ask the various celebrities, sports people or politicians who have been on the end of a dripping roast of scandal.

And so it is, in a different sense, with the Scottish housing market which has faced a recent barrage of negative stories and reports. The Scottish Fiscal Commission is predicting a looming 5 per cent drop in house prices and the Royal Institution of Chartered Surveyors (RICS) forecasts a weakened housing market in Scotland with buyer demand falling and house prices rising more slowly than before. Add to that the latest Halifax survey, which has highlighted four months on the trot of falling house prices in the UK and you would appear to have a miserable picture. But, as ever with property, a sense of perspective is important.

Some outlandish predictions would have you believe the residential market is facing meltdown, but I don’t think anything could be further from the truth, especially for the Edinburgh market. That said, house sales will probably face a more challenging year, although I would describe it simply as a softening of the market; there will still be opportunities for both buyers and sellers to achieve their goals.

Often Edinburgh is immune from the worst excesses of sale price dips, and this is, once again, likely to be an overriding theme for 2023. The capital is almost a case on its own in the current Scottish housing market and those doom-laden predictions also need to be measured against a very positive 2022.

For example, Edinburgh’s buoyant flat market had a good year with the average price of a two-bed property rising from £243,858 to £252,867. Houses also had a good year with the average price of a three-bed house rising from £341,133 to £377,916 (source: ESPC). The coming year, however, could see sale prices for flats nearer Home Report values as some landlords, stung by rent freezes and recent mortgage rate increases, add to the supply. The increased costs of purchasing buy-to-let properties, with the Additional Dwelling Supplement up from 4 to 6 per cent, might also curb activity.

With interest rates having risen, affordability will be scrutinized more rigorously by buyers – and of course lenders – and they may be less inclined to throw in offers well in excess of the Home Report value. The wider economic outlook is open for debate, but we may see a drop in rates during 2023. The buyer’s mindset, however, is currently fixed on affordability and the glut of media reports highlighting the cost-of-living crisis will only help make that position more entrenched.

A flat, often a transitional place to live, is very different to a larger family home and potential buyers might be more willing to bound beyond the Home Report value for a property they are likely to own for longer. The market for £1 million plus homes should remain lively. According to ESPC statistics the average sale price of a property across Edinburgh, the Lothians, Fife and the Borders between September and November last year rose by almost 9 per cent compared to the same period in 2021. It is important to bear that in mind for some perspective if prices dip slightly or stagnate.

It is, of course, important to temper your ambitions when selling and I suspect a more realistic outlook will be necessary for those putting their home on the market in 2023. The viewing system, post Covid restrictions, is back to normal and it is more important than ever that sellers select the right agent to act for them. Trust and confidence in your professional agent should trump any quick and cheap sale promises.

The traditionally popular areas in Edinburgh will remain strong this year with Comely Bank and the West End likely to be top performers in the flat market. We have also seen a marked increase in the number of larger family homes we are being asked to market and the good schools and general amenities in Morningside, Cluny, The Grange and Trinity will mean those areas are much sought after.

Whatever happens, for those who have a fascination for house prices, 2023 is likely to be an interesting year.

Residential Property Solicitors, Edinburgh

Murray Beith Murray Residential Property Manager, Iain Ogilvie specialises in the marketing and negotiation of residential property across Edinburgh and The Lothians and he is an expert in all aspects of buying and selling a home in Scotland. If this article has raised any questions or you would like to discuss a residential property matter, then please complete our contact form, or call us on 0131 225 1200.

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