Our latest quarterly house price report shows a widening of the Reality Gap (the difference between what house sellers hope to sell their properties for and the price they actually achieve) as the average selling price fell in the first quarter of 2012, to 10% below the average asking price.
The s1homes Scottish house price report reveals that the average asking price across Scotland remained almost identical to the previous quarter, at £166,386, in the 3 months to March. However, the average price that properties were actually sold for (as reported by Registers of Scotland) decreased from £157,197 (October to December) to £148,764 (January to March). This means the average property in Scotland is now selling for around 10% less than the asking price, that’s around £17,500 less compared to £9,000, 3 months ago.
Mark Smith, Managing Director of s1homes said: “After a reduction in asking prices at the end of 2011 and maintaining those prices in the first quarter of 2012, it would appear that buyers are now in the stronger position and are coming in with even lower offers. It will be interesting to see what happens in the coming months.”
Commenting on the report, Gina Pacitti of Pacitti Jones Solicitors and Estate Agents said: “There may have been little change in prices in recent months, but there has been a marked increase in activity. Buyer enquiries are up sharply and we have held more closing dates since January than we have for the last three years. For the first time since the start of the recession, we are seeing regular closing dates and properties selling for more than the Home Report valuation. A recovery in confidence always precedes any movement in prices, so it is no surprise that we have seen no movement in values. But there are clear signs that confidence is gradually returning”.
At the lower end of the market (flats and terraced houses), sellers appear to be more realistic and are achieving marginally above their asking prices. However, at the higher end the Reality Gap is growing as the average selling price of a detached house is now almost 20% below the average asking price.
Across Scotland, the majority of regions saw an increase in the Reality Gap even though average asking prices were generally falling, as average selling prices fell further. However, Argyll & Bute, East Renfrewshire and Renfrewshire/Inverclyde all saw marginal decreases in the Reality Gap.
In Edinburgh, the Reality Gap reappeared. After bucking the trend in the previous two quarters with selling prices exceeding asking prices, January to March saw properties in Edinburgh selling for 10% less than the asking price on average.
Maurice Allan, Managing Director of Lindsays in Edinburgh said: “Market conditions remain challenging, with many buyers still finding it difficult to obtain funding at suitable levels. We have experienced an increased number of closing dates in recent weeks, but it should be noted that these are often focused in the most popular residential areas. Our Edinburgh and East Lothian offices have both reported numerous recent sales in excess of the Home Report valuation, but clearly there are many properties that are taking longer to attract offers. We anticipate that the overall picture will remain much the same over the next six months.”
The report, published quarterly, samples around 30,000 properties advertised on s1homes.com every month and provides trends in the various property markets throughout Scotland. For more information visit www.s1homes.com/house-price-report.