Warning of two-tier market as city bucks property trend

The Capital is bucking the nationwide trend in house prices, new figures have suggested, with property values rising against an overall fall.

The city outperformed other local authority areas, with increases in value of 4.5 per cent against an average reduction in value of 0.5 per cent.

However, today property experts warned that behind the headline figures – £216,000 up to £226,000 – a distinct two-tier market has emerged.

Those at the lower end of the market struggle to sell and cut the asking prices to attract first-time buyers.

At the upper end, three and four-bedroom detached homes continue to sell to larger families with deposits and taking advantage of low interest rates.

The figures were released yesterday by Registers of Scotland and measured the final quarter of 2011 against the same period in 2010.

Leslie Deans, of Leslie Deans & Co estate agents, told the Evening News: “Statistics don’t always give the full picture, and that is the case in this scenario.

“Here you have a moribund market at the first-time buyers end, desperately slow, with small flats in the city not moving and prices dropping.

“This is entirely down to lenders demanding large deposits from first-time buyers.

“On the other side of the coin ,we have seen last year, and so far this year, excellent demand for good-quality three and four-bedroom detached houses, prices ranging from £250,000 to £400.000.

“The statistics don’t see this but what you effectively have now in Edinburgh is a two-tier market.”

Despite that, Mr Deans pointed to the stamp duty exemption, running until March 24, which is expected to lead to a surge in purchases from first-time buyers.

David Marshall, business analyst at ESPC, added: “A lot of the activity at the lower end of the market, places like Gorgie and Dalry, used to come from first-time buyers who are now struggling to get deposits.

“Owners face more competition from other sellers to attract from a small pool of buyers and prices are pushed down.

“Whereas quality family homes, people already on the ladder, are still selling to a greater extent.”

Elsewhere, the report found house prices in East Lothian had fallen by nine per cent, from £215,000 to £196,000.

Midlothian saw a similar drop of 9.4 per cent, from £173,000 to £156,800. West Lothian saw one of the largest increases nationwide, 5.2 per cent, although from a low base of £140,000 to £147,000.

The average house price in Scotland remains £157,000.