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Opinion: Uncertain times, or are they?

November 17, 2022

Following the Bank of England increase on the base rate earlier this month on the 3rd November, let us see what this has meant for the market in Edinburgh and wider Lothians.

Despite, the doom and gloom from the general media about increasing mortgage rates and the cost of living crisis the reality and effect on the housing market has not been quite as bad as initially predicted or reported.

We have been able to see a number of lenders bring back their mortgage products to the market following an initial withdrawal of hundreds, if not thousands, of mortgage products over the past few weeks once the new base rate was announced. But what does this mean for the property market?

It has been recently reported by Royal Institution of Chartered Surveyors in their Residential Market Survey from October 2022 that supply levels have started to ease with less properties coming on the market available to buyers.

Despite this, the latest figures which have just been announced by Registers of Scotland in their quarterly report states that the provisional statistics from the UK HPI (House Price Index) show that the average price of a property in Scotland in September 2022 was £191,941, an increase of 7.3 per cent on September 2021.

For Edinburgh, the Lothians, Fife and the Borders these areas on average have seen house price increases of 9.4 per cent between July to September 2022. The average sale price of £299,649.

However, we anticipate that house prices may begin to either level off or reduce in the coming months as buyers adjust to the new ‘normal’ mortgage rates and reassess what is going to be affordable for them. But this could just mean that buyers are no longer willing to pay such large percentages over the Home Report market valuation as has been the case until recently.

Nonetheless, the report from Registers of Scotland published this week does advise that properties have on average been attaining 108.4 per cent of their Home Report valuations at sale. More specifically, in Edinburgh properties here sold for 108.1 per cent of their Home Report valuations. This is an overall increase of 2.5 per cent increase compared to last year.

It does need to be mentioned that as the report from Registers of Scotland has reported on the last quarter going forward these statistics will be influenced by the ongoing changes to mortgage rates and what mortgage products will be available to buyers; the recent Bank of England interest rate increase and off course the Autumn Budget on November 17th.

Following the Autumn Budget, it is believed across the residential conveyancing sector that we will begin to see the stabilisation of mortgage rates in the first quarter of 2023 which in return will hopefully see improvements to buyer’s affordability.

As always, with a short supply in properties on the market as has been in the case in recent months and with continued demand for properties at a high level, this could mean that see any potential decrease in house prices (or just a drop in the percentage over Home Report Valuations) could be somewhat temporary and may not as dramatic as initially feared. 

If you would like any help or guidance in navigating the current market place then please feel free to contact our Edinburgh Residential Conveyancing Department a call on 0131 222 8000.

If you have any questions, please contact a member of the Blackadders Residential Conveyancing Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.

Nicola Burns

Nicola Burns

Director of Operations

Marketing Team

+44 1382 342217

The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.

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Opinion: Uncertain times, or are they?

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