George Solley, director of property sales at Thorntons, said: "Dundee appears a "statistical" victim of its own success in the recent report issued by Lloyds TSB regarding average house price movements in Scotland since the start of the recession.
"The average price increases in the city during the years leading up to the recession were exceptional and some of the influences which created that performance have declined over the last three years. One significant factor was the large scale development of new build homes to meet the demands at the middle to higher end of the market. This saw house prices and the volume of houses sold in and around the city reach all-time highs in 2006/2007.
"As market leaders in the sale of new build property in Dundee and surrounding areas, Thorntons Property Services has experienced first-hand a reduction in activity in this important market sector.The loss of these high value sales from the mix will have had a significant influence in the average price of house sold in the city. The average price statistic has to be read in the right context. Reduction in activity in higher value areas of the market, including significant reductions in new homes activity will inevitably reduce the average sale price statistic. This need not mean that actual house prices have reduced.
"Looking at the shorter term statistics from the lender's report, the recent trends referred to relate to sales measured from the 'draw down' of mortgage funds in the months concerned which occurs on the dates of entry to the properties concerned. These relate to actual sales activities in the months leading up to April, which was a particularly difficult time following a hard winter market.
"Actual activity at the moment, in terms of new properties coming to the market, offers received and sales agreed for the month of May 2011, has seen a significant improvement over the earlier months of this year. Indeed, sales activity in our Dundee branch for May already exceeds the May 2010 figure which is encouraging.
"A lack of enthusiasm to buy, or a concern about the affordability of mortgages, is perhaps not as significant a factor as suggested in the report from Lloyds TSB. There is more a concern regarding the availability of suitable mortgage facilities to key buyer types, including first-time buyer, on terms and conditions which they can meet. That is still the main reason for the reduction in the number of properties sales.
"Given the extreme level of sales activity pre-recession, the report's measured 50% decline in the numbers does not amount to inactivity. The sale of property in popular locations has improved. Selling at a fair price and buying at a fair price, for those moving to a larger home, can cost less than moving during a boom market. For those in a position to do so, this can prove a favourable time to move home."
George Solley, Director of Property Sales
Thorntons Property Services
May 2011
Issued by Beattie Communications on behalf of Thorntons Solicitors.
Contact: Kimberley Hamilton, Tel 01698 787878