Location ... Location ... Location?
This article appeared in the September 2006 Issue of Homeplus.
As another busy year for the property market draws to a close,Lawrence Marshall, a Partner with leading private client solicitors, Bird Semple, takes a look at what’s been happening in 2006, paying particular attention to the interesting state of affairs in Glasgow.
There is a common misconception that the Property Market reacts in a uniform manner throughout the country. In reality, most of the time different sections of the market react in different ways, although there are patterns that emerge and relationships between different areas.
This is most evident in relation to flatted property in the Glasgow area.
By far, the most popular area for owner occupation and buy to let is the West End of Glasgow. Over the last five to ten years this has produced the greatest increase in prices amongst all areas of flatted properties in Glasgow. As a result, the area now regarded as the West End is greatly extended from what was the West End 20 years ago. As people find it increasingly difficult to afford property in the original ‘core West End’, the peripheral areas increase in value and become absorbed in the ‘new West End’.
When people feel they can no longer afford the extended West End, they look across the Clyde to Shawlands and this inevitably has a consequential effect of increasing the demand and therefore prices in Shawlands and the surrounding areas.
When these prices increase to a point where they are beyond purchasers, their next port of call is East to the Dennistoun area.
When the market then slows down, the first area to notice the change is likely to be Dennistoun, as purchasers find that they can afford to purchase again in Shawlands. If the market continues to slow the same thing happens in Shawlands and purchasers find that they can again afford the extended West End as a result of the slowing market in Shawlands. Although these changes in the market will eventually affect prices in the West End, over the last cycle this has tended not to be very obvious.
Three or four years ago almost every property in the West End was going to a closing date and selling for what might have been regarded as crazy prices. While this still occurs for many West End properties, it does not by any means occur for all.
However, almost regardless of market conditions, it remains a fact that the properties that do sell well, and have closing dates, tend to be the properties in the most desirable areas or the most attractive properties in the slightly less desirable areas. It is as always a question of supply and demand and if you have something for sale that is not readily available elsewhere you will still sell at a very good price in today’s market. The ripple effect between areas is most obvious in flats but it does also occur, although less obviously in other areas, particularly in sought after areas for family houses. Certain areas, both the North and South of the city including Bearsden, Milngavie, Jordanhill, Newton Mearns, Whitecraigs, Giffnock, Clarkston, with their good schooling, good housing and a history of increasing values remain very popular. They continually attract a lot of interest and sell for good prices, very often at closing dates.
Similarly, unique and well presented houses in other areas can still sell well, although it is more difficult to generate the same level of interest amongst purchasers. High selling prices are achieved by having multiple purchasers at closing dates and the numbers of purchasers offering has a direct bearing on the price achieved by the seller. Properties that attract 4 or 5 offers at the closing date on average will yield higher prices than properties with 2 or 3 offers at the closing date, although there are many exceptions to this general rule. The reason for asking prices being so low is to try and attract additional purchasers into the process and thus drive the price higher. The Scottish system, unlike the English system is a system that works best for sellers and worst for buyers because of the closing date system and this tends to underpin the Scottish market.
But buyers take heart.. Remain patient and selective… There are good purchases still available!
Article compiled by Lawrence Marshall
Posted by Sharon Clift on Aug 17, 2006
