It’s been quite a start to the year and one that we didn’t expect. Breathe it softly but…the property market in Edinburgh at least seems to be returning to some semblance of health. If you’ve been following my updates for some time now then you’ll know that I have been fairly unoptimistic about the state of the market for some time so it will come as no surprise that I temper this good news with a little caution too!
So, why do I say that the market seems to be returning to some semblance of health?
Well, in the first week back after Christmas we sold a number of properties that had been lingering around on the market for several months. There was nothing wrong with them, nor the way we were marketing them: they just weren’t attracting any interest. And it’s that last word, ‘interest’, that is key here.
The statistics are showing that more people are looking at the properties that we are marketing on the variety of websites that we advertise the properties on. More anecdotally (I wouldn’t generalise the entire market based on our own experience, but it’s still interesting…to me at least!), the number of phone calls about properties we are marketing has been going up too. This is also translating into more viewings. Properties that hadn’t had a viewing for a while are suddenly having getting encouraging signs of progress.
But is this translating into concrete results for property sellers?
Yes! You would of course presume that, based on the simple principle of supply and demand, if there is more demand or interest in a product then this will cause more sales or increased prices. And in this case that presumption would be absolutely right. Properties that were on the market for a while are now selling. Not only that but there are more Notes of Interest and more closing dates being set. We have had multiple offers on a few properties already this year. In short, the market is moving again and, thus far, we are seeing a cautious return to the days when, in Edinburgh at least, you could put your property on the market with at least a very good prospect of selling it.
So, what is the caution that I would urge (pessimist that I have become in the last couple of years!)?
Well, we could have just had a bit of a bottleneck over the festive period which is leading to a slightly artificial ‘blip’. What do I mean? We had an awful December in terms of the weather and then the holidays: it’s only a part month at the best of times and the sub-zero temperatures and snow hardly encouraged people to leave their homes and go looking at other people’s homes! In addition, very few people put their property on the market in December, preferring to wait until the new year or even February or March of the new year. Some people also take their properties off the market for a while because they don’t want to have to worry about it over the holidays. Lastly, and especially with the weather being as restrictive as it was this past December, people are sitting around their homes (which perhaps are feeling a little bit smaller than they used to because of all the family being home) with a lot of time on their hands to browse the internet for property. In brief: we have had a seasonal drop in supply and an above-averagely seasonal spike in demand. Which of course would lead to the circumstances that I have mentioned above.
So is this a ‘blip’ or is it sustainable?
Of course, it depends on supply i.e. the number of properties coming to the market. If the spring sees a flood of properties coming to the market but no increased supply of funding or relaxation of the lending criteria by mortgage suppliers, I’d expect that we will see lower interest-per-property ratios. This of course will mean that some properties take longer to sell in the spring than they would now. It also means that there will be less competition and therefore lower prices on those properties. Supply and demand is of course a fundamental of any market so by that rationale it would be difficult to call the market at any time. However, the market is more precarious than it used to be because the volume of transactions is still relatively low. It is therefore more sensitive to smaller variations of these key factors.
In conclusion…watch this space!
I will know much better towards the end of February how the market is shaping up for the coming months. I am delighted to be able to report good news at the moment for property sellers. Equally I urge caution to anyone who wants to conclude from this spike in interest and sales that it will continue and that we’re back to the ‘good old days’ where you stick a For Sale Board up and a bidding war automatically ensues! I’ll be in touch again next month and in the meantime just keep my fingers crossed that I will be reporting good news then too…