HIGH demand and low supply has led the Capital’s property market to become a “feeding frenzy” as buyers desperately try to outbid their rivals, it has been claimed.
Property prices in some parts of the city shot up by nearly 20 per cent over the last three months compared to the same period in 2016.
A report compiled by property experts ESPC shows Gorgie and Dalry are proving particularly popular, with one bedroom flats in the area costing on average £135,479 from May to July.
It marks a jump of 19.9 per cent on the same period last year, with property prices in Abbeyhill/Meadowbank seeing a similar jump of 17.1 per cent to £152,753.
And according to the report it’s good news for sellers across the board, with the average time for a property in Edinburgh to be snapped up just 14 days.
ESPC business analyst Martha Botha-Lopez said the prices of flats in areas like Gorgie and Dalry was in part being fuelled by a lack of supply despite continued high demand.
She said: “This is the first year-on-year increase in sales and properties listed that we’ve seen since the first quarter of 2016 when volumes were driven up by the second homes supplementary tax, which created a forestalling effect. Potential buyers brought forward their plans to purchase a new property due to this extra tax.
“While there is generally a slowdown in the market over the summer months, ESPC member firms for the most part expect listings, sales, selling prices and time to sell to remain roughly the same over the next three months.”
House prices across Scotland’s east central region are also continuing to rise, with buyers in the last three months forking out an average £238,703.
Ms Botha-Lopez said: “One and two bedrooms are in high demand, but again, a lack of stock is driving up the prices and making it more difficult for first time buyers to get a foot on the ladder.
“Anecdotally, agents are reporting that there are fewer one bedroom flats coming to the market because they are being kept on as rental properties.”
The report shows prices are also on the rise in Morningside and Merchiston, with two bedroom flats selling for an average £292,201 over the last three months.
This marks a year-on-year increase of 16.8 per cent.
Robert Carroll, founder and solicitor of Edinburgh-based firm MOV8 Real Estate, said low availability had helped contribute to a “feeding frenzy” whereby multiple buyers end up bidding on the same properties, driving prices up.
He said: “High demand and low supply to the market has the effect of increasing selling prices whilst decreasing selling times.
“It is not uncommon in the current market conditions for a property to sell within just a few days of coming to the market after the seller has received multiple offers.
“The remarkably strong seller’s market isn’t translating into a large number of sellers having the confidence to get their homes onto the market for sale. It seems that whilst buyers are quite bullish about the current market, sellers are a little more cautious.
“The lack of availability of homes to buy is also contributing to sellers not wanting to put their own property on the market until they have first found one to buy. With many people feeling the same way, this fuels a bit of a vicious cycle.”
David Marshall, property operations director at Warners Solicitors and Estate Agents, said the price rises in areas like Gorgie and Dalry were no surprise, particularly with its close proximity to the city centre.
“Whether it’s first time buyers or Buy to Let investors it’s a pretty popular part of the city,” he said. When you start seeing properties like that going on and attracting competition you’ll find the offers they are attracting are a good way in excess of valuation.”
But despite the overall upward trend, Mr Marshall said he anticipated prices levelling out as the year pushes on. He added: “Throughout this year we have been seeing an increase in the number of homes coming on the market.
“I think we will start to see the number of homes coming on continue to inch upwards and that will hopefully bring a bit more balance to the market.
“The best thing for the market overall and the vast majority of people is to have a healthy market [so that] whether you want to get on the ladder, move up or down you are able to do so in an affordable manner.”
Sighthill and Gorgie councillor Donald Wilson said he was slightly surprised at such a steep rise in his area but acknowledged it had many draws, including its location and growing variety of restaurants and cafes.
He said: “One bedroom flats in the area have traditionally always been very popular with first time buyers so I would think that this does make it more difficult for people to get on the property ladder.
“There are very few council houses left in the area. We have got some developments coming on like north Sighthill which should help with housing in the area but it means the needs for affordable housing is all the greater.
“As a place to live I can certainly understand why it’s becoming more desirable but it does make it more difficult for people to get on to the property ladder in the first place.”
According to ESPC data, other parts of the city which recorded rising prices include the city centre – with the average cost for all properties increasing 14.2 per cent to £322,940 – and Leith, where the price of a one bedroom flat went up 12 per cent to £181,191.
But in Bellvue and Broughton prices were revealed to be on the downturn. The firm’s data showed the average price of a two bedroom flat in the area went down 9.2 per cent year-on-year to £242,594.
Meanwhile in Currie and Balerno the average cost of a three bedroom house also went down, dropping 8.3 per cent from £317,954 to £291,463 over the same period.