Over the last few weeks there has been a lot of interesting news about the state of the UK property market and the Scottish property market in particular. The most recent of these are the quarterly statistics from the Registers of Scotland which, on the face of it, make very positive reading showing volume of sales from January to March being 17,828, an increase of 22.9% with prices for the same quarter being up 3.5% over the same period. As I have previously mentioned, I do think that statistics, particularly in relation to house prices, need to be treated with a degree of caution as these can be manipulated to show anything that the provider would like.
So what is my feeling about the Scottish property market overall? I would caveat this question by focussing in on properties coming on the market and properties going under offer now rather than actual settlements – the Blackadders Residential team has had a record month in April for sale and purchase settlements and I am pleased to advise that May is carrying on that trend.
In relation to properties coming on the market, my feeling is that this number is up compared to last year and probably up 15% at the end of March compared to the same period last year.
I believe there has been a slow down on the number of properties coming on to the market in April caused by holidays and also the perception of the home owning public that there’s a lack of stock to buy – “why should I put my house on the market if there is nothing there that I want to buy?” – the danger is that this view becomes a self-fulfilling prophecy. My feeling is that April will show numbers comparable to April 2013 and this is a real concern to me as this could have an impact on future transaction numbers.
In relation to prices, there is no doubt that we are seeing significant price rises which, although have been partially driven by improving economic conditions and the freeing up of mortgage funds, have also been caused, more significantly, by a decrease in certain types of properties in certain locations (finding properties in the correct catchment area, in the correct price banding for the geographical area are proving very popular). I think that if the generalisation from the Registers of Scotland about the increase in house prices was distilled further it would show notable differences, not only between geographical areas but also types of properties within those areas. There has been significant price increases between the beginning of January and end of March. As long as stock numbers remain low supply and demand being out of synch will ensure this trend continues to the detriment of the majority of purchasers.
So what of the future? I think May will be a critical month and will point the way for the rest of the year for the Scottish property market. If there is a surge of properties coming on to the market in May we will have the stock to keep the property market free moving. If there is not an increase in the number of properties coming on then I think house prices will continue to rise significantly and there is a real danger of stagnation as people will not market their properties because there is nothing for them to buy. If this is the case then I think the best we can hope for in 2014 is the same as 2013.
What action is required:-
1. The Scottish Government should abolish the Home Report now and remove this costly barrier for people putting their homes on the market and testing the market.*(a blog to follow).
2. Local Authorities should look favourably on planning applications for large developments as it is only by getting this new build stock on the market that we will increase the size of the stock on the property market to get things moving.
3. We need to carry on helping first time buyers get on the market.
This review is very much a generalisation as there are still some significant geographical differences, for instance between east and west, Aberdeen and Edinburgh. This is also my own opinion based on statistics from the Blackadders Property team and other statistics and chats that I have had over the last few weeks.
I will continue to keep you advised of trends.
1. Is the Referendum in September now having an impact on the Scottish property market?
2. What impact will the Mortgage Market Review (MMR) have on mortgage lending going forward and therefore on the property market as a whole?Lindsay Darroch Partner – Head of Property