Property sellers are now consistently achieving sale values that outstrip asking prices, providing further evidence of the continued strong performance of Scotland’s housing market.
The s1homes Scottish House Price Report for Q2 (April-June) 2014 shows that average selling prices have jumped significantly to almost match average asking price levels. The average selling price has increased by 6%, over £9,000, since the same time last year.
The trend has seen the s1homes ‘Reality Gap’ (the difference between what sellers hope to sell their properties for and the price they actually achieve) close significantly to less than 1%, from 5% in Q1 Jan-Mar. Over the period, the average asking price rose by £2,000 while the average selling price increased by more than £8,500 to £162,122.
The report also reveals that there is no evidence of a ‘Reality Gap’ for owners of semi-detached houses, terraces and flats in Scotland as prices achieved for their properties exceeded asking prices.
Flats and terraced houses have enjoyed the fastest growth in prices, compared with Q1. Flats continue to sell way above their asking price, typically changing hands for around £18,000 more – up from £11,000 last quarter.
Terraced houses sold on average for £11,000 more than asking price, while semi-detached houses saw an average rise of £8000 in selling prices.
Ewan Stark, Managing Director or s1homes, said: “Emerging evidence of the disappearance of the ‘Reality Gap’ is significant. The fact that properties are selling for more than asking prices is further proof that buyer confidence is continuing to grow in Scotland.
“But rising prices are not good for everyone as it can mean certain groups of buyers, such as first time buyers, can find themselves being outpriced. It is important the property market in Scotland continues to grow in a steady and manageable way.”
Eric Curran, Managing Partner of Chartered Surveyors, DM Hall said: “A comparison with last year’s figures for the same quarter reflects a similar seasonal trend.
“Last year’s average Q2 asking price was significantly higher, while the average selling price was considerably lower than this year.
“Average selling prices this quarter have increased with more realistic asking prices also being set, meaning the reality gap reduced to less than £2,000. This emphasises our position that a sensible and realistic asking price will in turn lead to a more favourable selling price.”
Robert Carroll, of Move8 Real Estate, added: “Factors such as the government-assisted Help to Buy scheme and historically low interest rates have contributed to both rising prices and a narrowing of the ‘Reality Gap’.
“There is no doubt that the imbalance between buyer confidence and seller activity in the past few months has caused house prices to rise and has led to us seeing a higher proportion of properties selling, far more quickly, than they have done in the past few years.”
Detached properties are the only property type where a ‘Reality Gap’ still exists in Scotland, this has remained at 13% for a second consecutive quarter as both the average selling and asking prices increase. Typically, detached houses are selling for £37,000 less than their asking price.
Regionally, East Renfrewshire experienced the biggest increase in average asking price, up nearly 3.71%, a significant change from the 4.6% drop recorded in the first quarter of the year. Only three regions recorded a drop in asking prices – although the changes were small; South Lanarkshire (0.05%), North Lanarkshire (0.90%), Stirling/Clackmannanshire (1.37%).
Across Scotland and Argyll & Bute and East Lothian both lay claim having the largest ‘Reality Gap’ in Scotland (at £28,000 and £27,000 respectively), although both have seen average selling prices rise considerably which also significantly reduced their ‘Reality Gap’.