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

House price inflation hits 10.5%

The recent Nationwide house price survey indicates that house price inflation has hit 10.5%.  Regular readers of this blog will know of my disdain and concern for house price surveys given their tendency to paint a misleading picture and also not to accurately show the basis on which they are benchmarking their headline.  However, it was interesting to see that the Nationwide did post a note of caution in its report advising that the past 12 month surge would tail off later this year with sellers starting to outnumber buyers.

There was a reduction in the number of purchasers in the Dundee and Angus areas in the last 18 months, however, this was balanced with the number of properties coming on the market effectively reducing by half and then half again since the peak of 2007, keeping prices level and in some cases growing. We are now noting a huge increase in the number of properties coming on to the market, not back yet to 2007 levels, but moving in the right direction.

My concern is that with the lack of first time buyers and also the number of sellers who are non-movers, i.e. executry sales or people who are wishing to move out with the area, I think this will cause house prices to level off in the 2nd half of the year.

I am pleased to note that the property market is however gaining a momentum and one advantage (the only advantage!?) of the dreaded Home Report is that because of the high upfront cost at least you have to assume that every seller is a committed seller given the amount of money that is now involved in the process.  I am sure that there will be more blogs over the next 12 months confirming the trend in prices and I will continue to update you.