Median price at August 2008: £219,124

General increase since Sept 2007: -1%

Projected increase to Sept 2009: 0-2%

Five-year increase: 51% (£145,188)

Ten-year increase: 185% (£76,943)

(Median prices for Edinburgh are for the city as a whole)

The complete Edinburgh Central price guide

Market view: Last year we stated: “If a week is a long time in politics, two years is an eternity in the capital’s housing market.” Three years, therefore, must be akin to a whole new temporal category.

Last year the average price in central Edinburgh rose by 17% to £222,441, with experts such as John Coleman of Knight Frank confirming that £1m sales had become increasingly unremarkable, and £2m-plus had now become the entry-level price for detached family homes in the best areas. And it is hard to believe, but only 12 months ago, Edinburgh was basking in the warm glow of its first two £5m sales.

Four years ago — back in 2004 — the average price of property in the capital momentarily fell, and 54% of homes with the Edinburgh Solicitors Property Centre (ESPC) were available to buy at fixed prices. Such falls have been rare — until now, that is.

Prices have dropped in the capital over the past 12 months, but the estimates of the amounts vary. HBOS claims a fall of 1%, the ESPC says 6.5%, and privately many city agents say some homes have fallen in value by as much as 5%-10%. Just 400 sales were completed in August, compared with 985 during the same month last year, according to the ESPC.

Savills’ Peter Lyell, the doyen of Edinburgh estate agents, confirms: “I believe we hit a price ceiling in 2007. We’ve seen consolidation throughout the capital this year, especially in established areas, and possibly some sales reversal in certain sectors of new-build. I think this will persist into 2009.”

Such price falls have to be set in context, however. With HBOS claiming a 51% uplift in prices since 2003 and a whopping 185% growth since 1998, owner-occupiers of a minimum three years’ standing will have built up a good buffer of equity to sustain them through any lean times.

Jamie Macnab of Savills welcomes the scrapping of stamp duty on property sales between £125,000 and £175,000 for 12 months. He says: “Undoubtedly, the concession will be a factor in boosting the number of transactions in Scotland. Uncertainty has very definitely put the brakes on the market.

“And we at Savills have been at the forefront of the movement to encourage the chancellor to announce his expected changes. In the past 12 months we estimate that some 30% of homes bought and sold in Edinburgh alone have been in this category.”

However, it remains to be seen whether a tax break equivalent to less than £2,000 in cold, hard cash will really make much difference to nervy buyers who will still have to go through numerous hoops to secure a mortgage and build up a decent deposit to secure the property they want. Our view is that the stamp-duty concession will make little substantive difference — it is better than nothing but a long way from being the panacea some are hailing it as.

According to Sandy Burnett of Murray Beith Murray, the situation in central Edinburgh requires some much-needed perspective. “Most people in Britain spend eight years in each home and anyone in the same capital property for that time will have seen their asset double in value. Prices in Edinburgh often plateau after a boom, but are not volatile as they are in London.”

Burnett says that central Edinburgh remains a magnet for both owner-occupiers and buy-to-let investors, and with rental values rising (as a reaction to the current lending restrictions placed on first-time buyers), landlords are coming back into the market. “We’ve just sold a £700,000 flat to parents of a student, so clearly the issue isn’t waning demand.”

The agent says the key message to get across is that the situation can be very much in buyers’ favour if they are looking to trade up, and that there is a window of opportunity that for the moment greatly favours buyers.

It will be more of the same for the foreseeable future, but that doesn’t mean if you are able or looking to buy you should be sitting tight.

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