Cameron Stephen's Review of 2017

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A good year for selling property in Edinburgh but a tough year from First Time Buyers

It is now coming to the end of 2017 and so I thought this would be a good time to give some thoughts to what sort of year it has been for the property market in Edinburgh.

A good time for selling property in Edinburgh

There can be no doubt that if you sold your property in Edinburgh this year you did very well indeed. With only a few exceptions all the properties we sold this year sold quickly and at prices well over their Home Report values.

Shortage of supply is the reason

But can I take credit for that? Can I say that there is something different or special about Cameron Stephen & Co. solicitors and estate agents, Edinburgh that no other estate agent does when marketing a property?

No. The simple fact is that it has been a good year for sellers selling property in Edinburgh because of the relative shortage of supply of properties coming onto the market. It is that old rule of shortage of supply leading to high demand which has resulted in price increases.

I was recently asked by a journalist why property prices in Edinburgh are rising when in London prices were falling; what made Edinburgh more desirable? I think she was asking the wrong question but perhaps she was more interested in the London market. Edinburgh is a great city and a great place to live but as a factor in determining property prices, it may play a part but, as I said above, the main factor influencing the cost of properties in Edinburgh in 2017 has been down to the shortage of supply.

And estate agents are competing more aggressively for seller’s business

2017 has also seen estate agents and solicitor estate agents competing more aggressively to get a seller to list their property with them, which is good news for sellers.

There has been an increase in the number of agents that are now offering a fixed fee for estate agency (something we have always done) and now the trend seems to be to offer sellers a “no upfront costs” option which is sure to be attractive to some sellers.

Are you thinking of selling in 2018?

If you are thinking of selling your property in Edinburgh in 2018, then you will be pleased to know that we will continue to offer our great value fixed fee for estate agency and for the sale conveyancing. So why not get in touch to find out more about the costs of selling your home and ask us round to give you a free pre-sale valuation of your home?

The rise of Purple Bricks

There can be no one that has now not heard of Purple Bricks and they have done extremely well in the Edinburgh area in 2017. They offer a good value for money estate agency service and perhaps, along with the shortage of properties coming to market, their presence in Edinburgh has been partly responsible for the competitiveness of the more traditional High St estate agents and solicitor estate agents. This battle between the two will no doubt continue in 2018 and beyond.

Personally I think Purple Bricks do a lot of things right. But the one thing I don’t like or agree with is the ability to make an offer online. In my view it doesn’t work and doesn’t benefit either the buyer or the seller. These things are best left to the solicitors.

An extra charge for viewing service

You will also notice if you get a quote from Purple Bricks that you will be charged a further fee of around £300 if you want them to do the viewings for you.

Now this is quite standard. Most estate agents and solicitor estate agents in Edinburgh do charge you extra for an accompanied viewing service, but if you are considering going with a commission-based estate agent to sell your home, you should ask why they are charging extra for this service, after all you are already paying handsomely for their services and so what really does their service consist of if they either do not offer a viewing service or if they will charge you extra for it?

However, as part of our standard estate agency service and included in our fixed fee, is free accompanied viewings during office hours (9am-5pm) on weekdays. But, yes, we do need to charge you an additional fee if we are to do viewings for you after working hours or at weekends, but it is still a terrific service that will help you save money and is part of our commitment to giving our clients a quality service with value for money.

LBTT and ADS

We are still seeing the effect of LBTT (the Scottish Stamp Duty) on the property market in Edinburgh. I do think that the tax is influencing home owners and putting them off selling and moving up the property ladder.

ADS (the Additional Dwelling Supplement) – the 3% tax on investment property – is also having an effect but not as much as many had predicted. We have still acted for plenty of buyers of investment property this year. If anything, perhaps ADS is having the adverse effect of slightly increasing rents. Who knows?

Throughout 2017 there has been debate about changes being required to the LBTT and ADS systems but governments are not likely to pay any attention. After all, they do know what is best for us. In saying that, as we seen in the Westminster Budget, there has been a concession to First Time Buyers and so we shall need to wait and see if the same thing will be included in the Scottish Budget in 2018.

A tough year for First Time Buyers

There is no doubt that 2017 has been a tough year from First Time Buyers in Edinburgh. We started off 2017 recommending to our clients that they would need to offer 7 or 8% above Home Report value to be in with a reasonable chance of being successful at a Closing Date. Now by the end of the year, at a Closing Date you really have to be able to afford to offer more than 10% above Home Report value and often quite a lot more.

Just by way of an example, last week we offered on a property. Our client was able to offer 24% above Home Report value and I really thought there would be no way that offer would not be the highest at the closing date. Wrong. There were 14 offers and the successful price was around 30% over home report value.

First Time Buyers need a large deposit

That is an extreme example but many properties are selling well over 10% more than the home report value and that is making it very difficult for many first time buyers to get an offer accepted.

And as I keep on saying, this means that First Time Buyers have to try to save a huge deposit. The issue is the Home Report. Mortgage Providers (lenders) will only give you a mortgage as a percentage of the Home Report Value of the property and not the purchase price. So every £ you offer over the Home Report Value is another £ you will have to find from your savings.

Perhaps in 2018 we might start to see a change and for buyers to think about getting the property re-valued once their offer has been successful. However there is no guarantee that the surveyor would be persuaded to increase their original valuation, but who knows; it is just a thought.

Problem is shortage of supply

However the real cause for property price increases in Edinburgh in 2017 is the shortage of supply of properties for first time buyers. As already mentioned above, the lack of properties coming up for sale in Edinburgh has meant fierce competition for those properties from multiple first time buyers and also investors.

Is the LIFT Scheme working in Edinburgh?

Although the LIFT Scheme might be working in other parts of Scotland, I think that if you are a first time buyer hoping to buy a property in Edinburgh using the LIFT Scheme, you will have been disappointed in 2017 and that will continue in 2018.

The biggest restriction in the LIFT Scheme is that buyers cannot offer more than the home report value for a property. And so, with almost every property in Edinburgh selling for more than the home report value that is why I say that there is almost no chance of buyers hoping to use the LIFT Scheme being successful.

How have we done in 2017?

Although I said that we couldn’t take the credit for our properties selling quickly and at good prices in 2017 I think we can take some satisfaction in reporting that this year the number of properties we have marketed and sold has increased by 24% which is not too bad considering the relative lack of properties coming onto the market.

And what do I think is the reason for this? I think sellers do see the benefits we offer in our estate agency and sale conveyancing services. We offer a good value service at a fixed fee without loss of quality of service. We already offer a service that is, in my view, far better than the traditional solicitor estate agent and our goal for 2018 and is to become even better.

 


Passionate about property and providing great service at value for money.

Cameron Stephen
Partner with Cameron Stephen & Co. solicitors and estate agents, Edinburgh
cameron@cameronstephen.co.uk
0131 555 1296

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