Property Market Predictions – 2017

Firstly, apologies to the loyal band of readers who have not had a blog since June 2016.  This is perhaps a sign of me trying to comprehend a very unusual set of circumstances, also coupled with an increase in activity amongst my client bank.  Rest assured, there will be more regular blogs from now on.  Before I give you my predictions for 2017, how did I get on in 2016?  Well, as I have said before, 2016 proved the most unusual of years for the property market.  My catchphrase for 2016 was “cautiously optimistic” with a concern regarding various changes including the LBTT and additional dwelling supplement, the Scottish Government election in 2016 and also the impact of a vote on Brexit.  Whilst I am still awaiting the final figures for the Scottish-wide property market for 2016, my feeling is that they will show a contraction in the number of properties coming on to the market of an average of between 6% and 9%.  This is a considerable contraction and one which is showing in relation to the spike in house prices in certain areas.  I would refer you to a previous blog “Stagnation Not Bubbles”.  The change to LBTT and the introduction of the additional dwelling supplement has had a catastrophic effect on the housing market.  Once again 2016 showed the Aberdeen market continue to reflect the low oil price but Edinburgh and Glasgow also showed signs of a slight slowdown which was also reflected in the Dundee market.  Again, I await data from the Council of Mortgage Lenders to confirm this feeling.

In summary, instead of the second half take-off as I was expecting from August, 2016 continued to stutter along with the property market at best plateauing and at worst showing serious contractions in certain areas.

So what of 2017?  Unlike the last couple of years, I would say that I am slightly more negative and am probably best described as cautious, losing the word “optimistic”.  I think that 2017 will be unchartered territory as the impact of Brexit, be it soft or hard, starts affecting people’s buying power. The continued uncertainty of Indy 2, the negative impact of the additional dwelling supplement and Scottish Government policies that in general seem to be anti-home ownership but are certainly anti-property investor, will all have an impact.  I think that we will continue to see low interest rates and good mortgage deals and I suspect there will be a further contraction in relation to the size of the market, but possibly not as large as some commentators are predicting.   I have seen contraction predictions in excess of 10%.

In relation to the property market, my wish for 2017 would include increased assistance for first-time buyers at the lower end of the price bracket, a review of the LBTT bandings and the removal of the additional dwelling supplement.  These are very similar to last year and each deserve a blog in their own right.  Sharp-eyed readers will note that I have dropped my call for the removal of the Home Report but this by no means signifies an acceptance, rather more a “what’s the point of calling on deaf ears”.

In summary, I am predicting a 5% decrease in market activity with a slight increase in house prices averaging around the 2% to 4% mark.   Again, the figures I would urge readers to look at are the number of properties coming on the market in Quarter 1.

I wish all readers a Happy New Year and I will continue to keep you advised of trends in the property market.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

Property market predictions for 2011

Is 2011 going to be the year that the green shoots start turning into something more substantial or when the light at the end of the tunnel turns out to be a train heading towards us?

I thought that the best way of dealing with my predictions for 2011 was to start with a review of the property market for 2010.  The start of 2010 was anticipated to carry on a continuing upward trajectory just as 2009 had finished.  This was slightly slowed down by the bad weather at the tail end of December 2009 and the start of January 2010, causing a slight dip in transactions in February.  In general, between February and September, houses coming on to the market exceeded expectations and were on average about 20% higher than 2009.  I would refer you to my blog of 10 November 2010 which included the graph from the Registers of Scotland showing the volume of residential sales over a number of years.  In September, as you will see from the graph, the number of transactions dipped below 2009 levels.  The figures for Dundee and Angus were slightly stronger and kept above line figures until November.  The early snow at the end of November certainly curtailed market activity and this, linked with a number of negative press articles and a general feeling of economic uncertainty, caused the figures to dip further with market activity for December being about 20% less than December 2009.  My feeling is that house prices did not show any remarkable drop and were relatively stable for 2010, however the caveat to this being that if you bought in 2007 the market has not yet reached those levels and also sellers in general are becoming more realistic regarding an achievable price for the property.

Now onto 2011.

My feeling is that with a lingering Christmas hangover, continuing economic uncertainty and the Government debt reduction plans starting to have an impact – including the VAT increase, the rise in fuel costs, the National Insurance increase and the public sector spending cuts – that the first three months of 2011 will see property activity levels below those of 2010, coming in at around 2009 levels.  I would anticipate a slight pick-up in the second quarter with 2010 levels being reached by the end of June.  Thereafter I would be expecting a strong last six months with 2011 ending on an upbeat note.  Again, I would anticipate prices remaining relatively stable during the course of 2011.

Issues to look out for range from simply the weather to the sovereign debt crisis which shows the impact of globalisation when the Scottish housing market can be affected by potential problems in Portugal, Greece, Spain and Ireland.  There is the question of the banks’ lending policies – if there is not significant support given by the banks to the property market then recovery will stall further.

My wishes for 2011:-

  1. Home Reports being abolished or at least temporarily suspended
  2. Tax breaks for property investors – through pension legislation
  3. Government assistance for first time buyers
  4. Tax breaks for the construction industry
  5. Government pressure put on lenders to increase mortgage lending and lending to small businesses

I have long been of the view that a strong housing market is essential to the UK economy and I would urge both Scottish and UK Governments to take all the steps possible to bolster the housing market for 2011.

Finally, I take this opportunity to wish all the readers of this blog a happy and prosperous New Year.

Lindsay Darroch
Head of Property Services
T: 01382 229222
E: lindsay.darroch@blackadders.co.uk