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ESPC and GSPC figures show price decline over 2010

14 January 2011

House prices in the west of Scotland fell by 3.8% in 2010 after a weak final quarter, according to figures from the Glasgow Solicitors Property Centre released today.

The sales data reflect those from the Edinburgh Solicitors Property Centre earlier this week, which revealed an annual decline of 2% in the capital and greater elsewhere in the east central area, apart from Midlothian which recorded an average 2.4% rise.

GSPC reports a "rollercoaster ride" for the property market last year. A strong recovery in demand and a shortage of supply in the first half of the year sent prices sharply up, 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% over the last three years.

Buyer's market

David Marshall, business analyst with ESPC, said that much of the sharp rise in the average price in the east seen earlier in the year "was predicated on higher demand for family housing which meant that larger homes accounted for a
greater proportion of sales than in previous years". Demand for smaller properties had been well below what would be considered normal levels, with first-time buyers and buy-to-let investors still facing difficulties, and "Ultimately no area of the market can operate in complete isolation".

Professor Gwilym Pryce, analyst for GSPC, said he qwas not anticipating a further sharp decline in prices. “The west of Scotland housing market will likely remain jittery for some time, with no immediate prospects of either a strong recovery or decline", he said. "House price growth is likely to remain stilted until the labour market and broader economy pick up”.

For Edinburgh, Mr Marshall predicted that "Overall we expect the average house price in most areas to fall back to levels seen early last year during the first half of 2011. Continued low interest rates mean the number of distressed sales should remain relatively small, which makes more significant falls unlikely and prices should level off later in the year. With that said, the balance of power in the market is likely to remain in favour of the buyer for much of 2011."

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