Following months of upheaval since the disastrous mini-budget last September, Q1 2023 saw an increase in interest rates for the 11th consecutive time, to 4.25%, in a bid to curb rising inflation. Despite this and the deepening cost of living crisis, the property market in Edinburgh, the Lothians, Fife and the Borders continued to perform well, with high buyer interest for quality properties. It is worth noting though that, compared to previous years where demand heavily outweighed supply, during January-March 2023, the activity in the housing market slowed its pace, with new home listings down 2.6% year on year (YOY) across the board. However, localised increases were recorded in a number of areas, for example, in South Queensferry (rising by 37%), St Andrews (up 36.8%), Newington (27%), Dunfermline (26.7%) and North Berwick (19.2%).
Regionalised variations in the Edinburgh, the Lothians, Fife and the Borders property market were also evident when analysing sales volumes. On average property sales dropped by 13.1% YOY, however, places such as East Fife and East Lothian, for instance, saw the numbers increase by 40.8% and 6% respectively, whereas in West Fife & Kinross sales volumes declined by 13.2% and in the Borders decreased by 5.1% annually.
Selling prices remain consistent in spite of market uncertainty
In January-March 2023, an average property in Edinburgh, the Lothians, Fife and the Borders sold for £270,284, an increase of 1% YOY. The highest annual price increases of 16.1% were recorded in Midlothian, where buyers paid £263,437 on average to secure their dream home.
Edinburgh saw a modest rise in the average selling price of 0.9% YOY to £286,108. Two and three bedroom properties continued to attract a lot of interest as per last year. In particular, three bedroom houses in Blackhall, Davidsons Mains and Silverknowes were in high demand, with the average selling price increasing by 25.4% YOY to £476,495. Corstorphine, Clermiston, South Gyle and East Craigs also saw a significant rise in the price for three bedroom houses, up 10.3% to £391,003.
Another property type that proved to be popular with Edinburgh buyers were two bedroom flats in Morningside and Merchiston, with the average selling price of £407,293 (an increase of 9.8% YOY), as well as two bedroom flats in Newington, The Grange and Blackford, where the average selling price was £308,115 (8.8% higher compared to January-March 2022).
Return to pre-pandemic norms in the Edinburgh, the Lothians, Fife and the Borders property market
The first quarter of 2023 saw 76.9% of homes across Edinburgh, the Lothians, Fife and the Borders sell for, or above, their Home Report value, with the average property achieving 102.8% of its valuation at sale. When compared to pre-pandemic levels from January-March 2019, it is clear that the market is returning to the norms observed then, with 72.7% of properties sold for at least their Home Report valuation and the average property attaining 102.4% of Home Report valuation.
During January-March 2023, homes in East Lothian achieved the most over Home Report valuation i.e. 104.3% on average (down 3.5% YOY), followed by East Fife, with properties achieving 103% of their Home Report valuation (a decrease of 4.9% YOY). In Edinburgh, the percentage of Home Report valuation attained was 102.9% (a 2.2% drop YOY).
In the past three months, a total of 23.2% of properties in Edinburgh, the Lothians, Fife and the Borders went to a closing date, which in comparison to January-March 2019 when this figure was 24.9%, suggests that the levels of activity are now similar to those we saw pre-pandemic.
Buyers adopt more cautious approach
Properties across Edinburgh, the Lothians, Fife and the Borders took longer to sell in the first quarter of 2023, with the median selling time of 28 days i.e. nine days slower annually and one day slower than in January-March 2019.
East Lothian properties sold the fastest in January-March 2023, in a median time of 25 days (nine days slower YOY), followed by homes in the Borders which took an average of 28 days to go under offer (same as last year).
The median selling time in Edinburgh also slowed down, now sitting at 29 days, eight days slower than same time last year.
Paul Hilton, CEO of ESPC, explains: “The post-pandemic era has seen an incredibly buoyant property market with a distinct lack of housing stock, coupled with high selling prices and quick selling times.
“However, in the first quarter of 2023, we are seeing clear signs that the market is cooling and returning to more normal levels last seen in 2019.
“Due to the cost-of-living crisis and interest rates increases, we can see that buyers are taking affordability into account reflected in a slightly slower speed of sale and some reduction in sales volumes.
“There has been continued interest in out-of-town areas such as South Queensferry, Dunfermline and Musselburgh which are popular with first-time buyers who are seeking homes with more space and good transport links to the city centre.”
