East has eclipsed west for property values

Senior News Reporter

Wednesday 20 June 2012

An east-west divide has opened up in Scotland over how property values have fared in the economically turbulent past five years, a snapshot study has found.

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MARTIN WILLIAMS

Typical house values in Edinburgh, Aberdeenshire, Midlothian and Dundee are up to 16% higher than they were five years ago, whereas areas such as Glasgow, North Ayrshire, North Lanarkshire and Inverclyde are as much as 13.7% down, experts say.

There is concern the new data from LSL/Acad Scotland show the number of house purchases has dropped by 62%, from 31,778 in the first quarter of 2007 to 12,102 over the same period this year. Sales of flats were hardest hit, with a 65% drop.However, the analysis said that between January and April, house transactions were 12% up on the same period last year.Analysts said that while traditionally they expect an increase in property sales of 8% between March and April, this year the increase is at 13%.Overall house prices have risen for a second successive month, returning them to the level they were at five years ago, the report says.The average cost of a house in Scotland stood at just more than £146,300 in April, up almost £500 on the previous month's figure.Analysts said the housing market appeared to be coping well in the face of "treacherous" economic conditions and suggested it may have turned a corner after a difficult winter.But the report admitted: "The reduction in properties sold reflects the difficulties faced by potential purchasers in being able to raise the required deposit to purchase a property, plus a reluctance to commit to the acquisition of a major asset in the current economic climate."Dr John Boyle, head of research at Rettie & Co estate agents, said the east was benefiting from the thriving oil and financial sectors."The east is doing better because the economic growth is more concentrated there, so your higher-value industries tend to have higher wages, and that acts as a catalyst to push up prices," he said.Dr Boyle also said that while the new analysis showed there was a 6.7% drop in average house prices over the past five years in Glasgow, there were improvements in the west end.Faisal Choudhry, associate director of residential research at Savills, said he was most concerned about the drop in sales. "The biggest concern is the dramatic fall in transaction numbers because of the fall in mortgage numbers," he said. "The market is driven by mortgage availability. Some areas are recovering better like Aberdeen, Midlothian, Edinburgh, East Dunbartonshire, areas that led the last housing market recovery and the current one."The LSL/Acad Scotland study said there was cause for some optimism, but sounded a cautionary note about the possible impact of the eurozone crisis on mortgage lending.Despite prices increasing nationally, 18 of Scotland's 32 local authorities have seen house values fall over the last year.Richard Sexton, director of e.surv chartered surveyors, part of LSL, said: "The housing market is coping admirably with the treacherous economic conditions swirling around it."Prices have risen for the second month in a row, suggesting the market may have turned a corner following a difficult winter period where prices fell for four consecutive months.He said "cautious optimism" describes the prospects for the market over the coming months.Once the three island groups are excluded from the analysis, Aberdeenshire and Aberdeen City saw the largest increases in house prices over the five years, up 16% and 12.2% respectively.North Ayrshire, East Ayrshire and North Lanarkshire experienced the largest declines in house prices compared to five years ago, with all of them experiencing drops of more than 11%.

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East has eclipsed west for property values

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