It is the first time since early 2008 that the GSPC quarterly market report has recorded two consecutive quarters of positive house price inflation. Sales in the first three months of the year were also sharply higher than in the same quarter a year ago, although selling times have lengthened further.
Prices remain volatile with sharp falls followed by significant rallies according to Professor Gwilym Pryce of Glasgow University, whose analysis forms the basis of the report. And some of the increase in sales is partly the result of sellers coming to terms with lower prices.
Although prices now are higher than a year ago, by 1.6 per cent, they dipped slightly in the first quarter of 2012. The dip was not enough, however, to entirely reverse a recovery in prices at the end of last year. The average selling price today is just over £131,000, above the £129,000 recorded in early 2011, but below the £133,000 average selling price at the start of 2012. Prices are now just over 12 per cent below their peak in mid 2007.
The results also reveal a divide between Glasgow, Scotland’s largest city, and the surrounding areas. Selling prices and selling times in Glasgow are both up on a year ago. In contrast, outlying areas have seen a fall in both prices and selling times. The former is typical of sellers digging in their heels and holding out for their desired price.
The latter suggests sellers coming to terms with market conditions and moderating their expectations on price to achieve a sale.
Despite the overall increase in selling times in the west of Scotland overall, sales recorded by GSPC are sharply higher than for the same time last year, although transactions remain well below historical levels.
Sales through GSPC members in the first three months of 2012 were over 15 per cent higher than the same time last year. This may be partly due to greater realism among sellers, but also reflects greater optimism and a new mood of decisiveness among buyers.
Commenting on the results, Professor Gwilym Pryce said:
“While overall the picture looks positive, the results remain mixed. The medium-term prospects for house prices in the West of Scotland are probably brighter than they have been for some time, but mortgage lending remains frugal and public sector spending cuts continue to bite”.
GSPC Chief Executive, Mark Hordern, commented:
“The first three months of 2012 have seen a marked improvement in sales and the first signs of a new mood of confidence among buyers.
"At the same time, the shortage of new instructions is gradually restricting supply and the resulting lack of choice is prompting some buyers to look again at homes that have been on the market for some time or to act decisively when a property first comes up for sale.
“Nevertheless, the market remains volatile and the obstacles to a full recovery are substantial. Lending is clearly an issue, but the wider health of the economy and particularly the prospects for employment will have a huge impact on the market. Without greater clarity on those, it is difficult to be confident about how the market will evolve this year.
"Overall, we expect no great shift in prices one way or another this year, but we do expect that a gradual improvement in the economy in the second half of this year will lead to an increase in the number of transactions and make it easier to move home.”
