House prices soar as buyers are ‘priced out’ across the Capital

HOUSE prices in some parts of the Capital have risen by an eye-watering 340 per cent in just 20 years.
New analysis shows the typical cost of a two-bedroom flat in Hillside – the area around Leith Walk, Easter Road and London Road – has jumped from £61,732 in 1997 to £269,942 now. And property professionals warned that an increasing number of people are now being priced out of the market.

ESPC, Edinburgh’s biggest property marketing company, has carried out a comparison of the city’s housing market as it was two decades ago and the way it is today.

Back in 1997 it was much easier for first-time buyers to get a foot on the property ladder, with more homes available for sale.

Last year, ESPC said, there was a shortage of housing stock for sale in Edinburgh, resulting in increased competition amongst buyers for the properties available.

The comparison survey found that, whereas properties in the New Town are now generally considered to be out of the reach of first-time buyers, back in 1997 it was the second most popular area in Edinburgh to buy a two-bedroom flat.

The average selling price for a New Town two-bedroom flat was £100,710 in 1997, compared with £319,355 in 2017 – an increase of 217 per cent.

In Leith, 20 years ago the average selling price for two-bedroom flats was £48,984, compared with £169,823 now – up 246.7 per cent.

And back in 1997, Leith was only the sixth most popular place to buy a two-bedroom flat, but now it is the top choice. ESPC puts that down to changes in the area, including pubs being given “hipster” makeovers and student halls of residence coming on the scene.

When it comes to one-bedroom flats, Morningside and The Shore were among the top five areas selling the highest volume of this type of property in 1997.

But nowadays fewer one-bedroom properties are selling in these areas.

A one-bedroom flat in Morningside sold for an average of £51,335 in 1997, but that has now increased 282.9 per cent to £196,540, pricing out many first-time buyers.

In today’s “sellers’ market” – where there is more demand than supply – properties in Edinburgh are going for on average 14 per cent above the asking price, according to ESPC.

That means first-time buyers need to be able to get their hands on more cash – above their initial deposit – in order to pay the extra.

And anything over the Home Report valuation has to come from a buyer’s savings rather than being included within the mortgage.

Twenty years ago, mortgages were also far easier to secure. The average mortgage base rate on June 1, 1997, was 7.95 per cent, compared to today’s interest rates ranging from 1.5 up to 4 per cent. But there are many more restrictions in place nowadays to ensure protection for both customers and lenders.

David Alexander, managing director of estate agents DJ Alexander, agreed the property market was now much more difficult for those trying to get on the housing ladder.

But he said most of the massive rise in prices probably took place in the first ten years after 1997 rather than in the last decade.

He said: “If you had taken a snapshot of the housing market in 2007 over the ten years up to then, prices would probably have already risen by around 200 per cent by then. And then if you take a snapshot now of the last ten years, since the crash, some properties have not got back to the values they had in 2007.

“It is undoubtedly much tougher for first-time buyers now than it was 20 years ago. Unless you have a substantial deposit it’s very difficult to get on the housing ladder. That’s why we find so many have gone into rented accommodation – because they can’t get the money for a deposit, they have no other option.”

EVENING NEWS, 21 February 2017