Sales volumes also remained constrained with the number of properties sold in the Capital down by almost 60% year-on-year for the third consecutive month. Just 400 sales were completed in August, compared with 985 during the same month in 2007.
The slowdown in sales has led to an increase in the number of properties for sale on the market. Currently there are around 3,400 homes advertised for sale in Edinburgh compared with just over 2,000 at this time last year.
This rise in the number of properties available, coupled with the constraints in demand caused by tightened lending criteria has left buyers in a stronger position to negotiate lower prices with vendors.
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There is evidence of sellers starting to accept this situation by moderating expectations on the price their property will achieve and accepting reduced bids from buyers. The average premium paid over the asking price on properties sold at offers over fell to just 14.3%, down from over 27% in August 2007. Similarly, over 62% of those selling properties marketed at fixed price accepted an offer below the original asking price, up from less than 28% last year.
Commenting on the results Ron Smith, Chief Executive of ESPC said: "These figures show that those sellers who wish to secure a sale are now starting to accept the change in market conditions we have witnessed over the last number of months. Most sellers are also in a position where they are looking to purchase a new home, so they are able to balance accepting a lower offer on their current property by taking advantage of their stronger negotiating position when they come to buy. The premiums people are having to pay on properties at offers over are as low as they have been in the last decade."
"Typically it takes people much longer to respond to news that the market is cooling than it does for them to react to news of rising house prices, so the fact that we are already seeing evidence of this sort of change in behaviour is good news for the long term health of the market.
"The reality is that for the majority of homeowners, average house prices are all relative given that if the value of your current home rises, the value of your next home is also likely to have risen by a similar amount. It is the number of sales rather than the average house price that is of primary importance to the local economy."
(GK/JM)
