jump to navigation

Soft Landings for House Prices 2006-09-30

Posted by clype in Articles of Interest, Glasgow, Money, Scotland.
trackback
  • House prices rising in line with inflation;
  • Earnings rising faster than property prices for first time since 2001;
  • Market experiencing ideal ‘soft landing’;
  • Demand and sales remain strong.

House prices in ‘West Central Scotland’ are heading for the softest of ‘soft landings’ as property price inflation in ‘Glasgow’ fell in to step with the CPI rate of inflation in the second quarter of 2006.

For the first time since house prices started to rise rapidly in 2001, average UK earnings are now rising faster (at 3.8 per cent) than house prices in Strathclyde (at 3.7 per cent).

House price inflation in Glasgow is now 2.5 per cent, according to the latest quarterly report from ‘Glasgow Solicitors’ Property Centres‘, ‘GSPC’ — that is a little above the CPI (2.2 per cent) and a little below the RPIX (2.9 per cent).

The report is compiled by ‘GSPC’, by far the largest selling agent in the area, and Professor Mr.Gwilym Pryce of ‘The University of Glasgow’. It has consistently proved to provide an accurate insight in to the property market in Scotland’s most populous region.

The average price of a house in ‘Glasgow’ is now 136 000 GBP — roughly 3 300 GBP up on the same time last year 2005.

House price inflation across ‘West Central Scotland’ remains higher than in ‘Glasgow’, but slowed to 3.7 per cent from 8.6 per cent this time last year. Prices have risen by about 4 500 GBP over the last year — a little short of 400 GBP/month.

  • The so-called ‘soft landing’ is the term used by economists to describe the ideal end to the boom in property prices — a period of price stability which locks in recent capital gains, but which prevents an unsustainable bubble in prices. On current trends, the property market in west central Scotland is turning out to be an ideal example.

Prices have slowed gradually since mid-2004, but there are no signs that this trend will eventually lead to a reversal in prices.

Demand remains strong with sales through ‘GSPC’ well above levels seen last year 2005. And other areas, notably the south east of England, which tends to lead the market, are showing signs of recovery after a period of stagnation last year 2005.

Indeed, it is possible that the headline rate of annual house price inflation will rise in the second half of the year for statistical reasons — house price growth in the second half of last year was at its weakest — although the most likely outcome is a period of minor fluctuation in prices.

Within ‘Glasgow’, differences in the rate of price growth between areas have tended to narrow as prices overall have slowed. ‘The West End’, ‘The East End’ and ‘The South Side’ are all experiencing similar rates of annual house price inflation (4.5 per cent, 6.4 per cent and 5.2 per cent respectively).

Outside the city, much the same is happening with most areas showing similar rates of house price inflation; ‘East Renfrewshire’ (9.2 per cent), ‘Renfrewshire’ (9.2 per cent), ‘South Lanarkshire’ (8.1 per cent), ‘North Lanarkshire’ (8.2 per cent) and ‘North Ayrshire’ (11.5 per cent) all display similar characteristics in terms of their house price inflation over the last 12 months.

Commenting on the latest quarterly results, ‘GSPC’ Chairman Mr.Michael Samuel, said:

‘We are experiencing a welcome combination of relatively brisk activity and price stability.

‘Doubts about the sustainability of recent price gains have largely evaporated and demand remains strong without re-igniting house price inflation so far.

‘We expect prices to remain broadly stable for the rest of this year, with relatively minor movements over the next six months. Nevertheless, the market remains sensitive to changes in interest rates.

‘It is likely that most buyers have already discounted a 0.25 per cent increase in rates expected this autumn, but a steeper increase in rates would have an impact on the market’.

Professor Mr.Gwilym Pryce of ‘The Urban Studies Department’ at ‘The University of Glasgow’, who conducted the analysis said:

‘In policy terms, house price stability is something of a “Holy Grail”, and “The West of Scotland” seems to be slowly converging towards that happy state at the moment.

‘The slowdown continues, but at a very gentle rate: it’s about as “soft a landing”as you could get’.

East Dunbartonshire: Average Price
Annual change in average property values Cumulative change from Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 59728
Q2. 1999 63182 3454 N/A 5.8%
Q2. 2000 65579 2397 3.8 9.8%
Q2. 2001 70102 4523 6.9 17.4%
Q2. 2002 83032 12930 18.4 39.0%
Q2. 2003 101219 18187 21.9 69.5%
Q2. 2004 126503 25284 25.0 111.8%
Q2. 2005 141954 15451 12.2 137.7%
Q2. 2006 150319 8365 5.9 151.7%
East End: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 46976
Q2. 1999 47549 573 N/A 1.2%
Q2. 2000 46103 -1446 -3.0 -1.9%
Q2. 2001 50103 4000 8.7 6.7%
Q2. 2002 56412 6309 12.6 20.1%
Q2. 2003 67297 10885 19.3 43.3%
Q2. 2004 84658 17361 25.8 80.2%
Q2. 2005 92548 7890 9.3 97.0%
Q2. 2006 98445 5897 6.4 109.6%
East Renfrewshire: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 59582
Q2. 1999 49942 -9640 N/A -16.2%
Q2. 2000 82947 33005 66.1 39.2%
Q2. 2001 74322 -8625 -10.4 24.7%
Q2. 2002 84779 10457 14.1 42.3%
Q2. 2003 109595 24816 29.3 83.9%
Q2. 2004 148581 38986 35.6 149.4%
Q2. 2005 156773 8192 5.5 163.1%
Q2. 2006 171144 19371 9.2 187.2%
Glasgow: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 71674
Q2. 1999 72523 849 N/A 1.2%
Q2. 2000 76264 3741 5.2 6.4%
Q2. 2001 81366 5102 6.7 13.5%
Q2. 2002 93781 12415 15.3 30.8%
Q2. 2003 102967 9186 9.8 43.7%
Q2. 2004 124098 21131 20.5 73.1%
Q2. 2005 132756 8658 7.0 85.2%
Q2. 2006 136101 3345 2.5 89.9%
North Ayrshire: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 43756
Q2. 1999 44063 307 N/A 0.7%
Q2. 2000 49724 5661 12.8 13.6%
Q2. 2001 48943 -781 -1.6 11.9%
Q2. 2002 55824 6881 14.1 27.6%
Q2. 2003 65889 10065 18.0 50.6%
Q2. 2004 86702 20813 31.6 98.1%
Q2. 2005 101117 14415 16.6 131.1%
Q2. 2006 112719 11602 11.5 157.6%
North Lanarkshire: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 39007
Q2. 1999 41644 2637 N/A 6.8%
Q2. 2000 42282 638 1.5 8.4%
Q2. 2001 45782 3500 8.3 17.4%
Q2. 2002 50462 4680 10.2 29.4%
Q2. 2003 56740 6278 12.4 45.5%
Q2. 2004 76541 19801 34.9 96.2%
Q2. 2005 90252 13711 17.9 131.4%
Q2. 2006 97688 7436 8.2 150.4%
North Side: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 47197
Q2. 1999 45092 -2105 N/A -4.5%
Q2. 2000 50636 5554 12.3 7.3%
Q2. 2001 46484 -4152 -8.2 -1.5%
Q2. 2002 55417 8933 19.2 17.4%
Q2. 2003 62449 7032 12.7 32.3%
Q2. 2004 82371 19922 31.9 74.5%
Q2. 2005 81890 -481 -0.6 73.5%
Q2. 2006 94115 12225 14.9 99.4%
South Lanarkshire: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 49553
Q2. 1999 50198 645 N/A 1.3%
Q2. 2000 51392 1191 2.4 3.7%
Q2. 2001 59772 8380 16.3 20.6%
Q2. 2002 65292 5520 9.2 31.8%
Q2. 2003 79482 14190 21.7 60.4%
Q2. 2004 101737 22255 28.0 105.3%
Q2. 2005 111098 9361 9.2 124.2%
Q2. 2006 120049 8951 8.1 142.3%
South Side: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 60674
Q2. 1999 61668 994 N/A 1.6%
Q2. 2000 62567 899 1.5 3.1%
Q2. 2001 68899 6332 10.1 13.6%
Q2. 2002 81183 12284 17.8 33.8%
Q2. 2003 91801 10618 13.1 51.3%
Q2. 2004 115729 23928 26.1 90.7%
Q2. 2005 118593 2864 2.5 95.5%
Q2. 2006 124797 6204 5.2 105.7%
Strathclyde: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average
Price £
Change
£
Change
%
Q1. 1999 60674
Q2. 1999 61999 1325 N/A 2.2%
Q2. 2000 65231 3232 5.2 7.5%
Q2. 2001 69983 4752 7.3 15.3%
Q2. 2002 80745 10762 15.4 33.1%
Q2. 2003 91748 11003 13.6 51.2%
Q2. 2004 114540 22792 24.8 88.8%
Q2. 2005 124416 9876 8.6 105.1%
Q2. 2006 128994 4578 3.7 112.6%
West End: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 91915
Q2. 1999 96099 4184 N/A 4.6%
Q2. 2000 102423 6324 6.6 11.4%
Q2. 2001 105357 2934 2.9 14.6%
Q2. 2002 127050 21693 20.6 38.2%
Q2. 2003 134898 7848 6.2 46.8%
Q2. 2004 155350 20452 15.2 69.0%
Q2. 2005 161120 5770 3.7 75.3%
Q2. 2006 168357 7237 4.5 83.2%
Renfrewshire: Average Price
Annual change in average property values Cumulative change from
Q1 1999
Date Average Price £ Change £ Change %
Q1. 1999 43516
Q2. 1999 45854 2338 N/A 5.4%
Q2. 2000 49643 3789 3.2 14.1%
Q2. 2001 51541 1898 3.8 18.4%
Q2. 2002 6980 9493 18.3 40.1%
Q2. 2003 70119 9139 15.0 61.1%
Q2. 2004 93745 23626 33.7 115.4%
Q2. 2005 100787 7042 7.5 131.6%
Q2. 2006 110092 9305 9.2 153.0%

P. Michael Samuel is senior partner of Miller Samuel & Co in Glasgow and has been a partner in the firm since it was founded in 1974. He specialises in residential conveyancing, estate agency and private client work.

His main interest outside the firm is Glasgow Solicitors Property Centre and he has been the Chairman of GSPC for over five years. During this period, GSPC has expanded greatly. Its membership comprises approximately 180 legal firms in the West of Scotland and the Centre currently registers at least 38 per cent of all residential property marketed for sale in the Glasgow area.

Links:

Advertisements

Comments»

No comments yet — be the first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: