Thursday, 18 December 2014
Scottish house prices to increase by 4% in 2015
• House prices to increase by 4% in Scotland
• Cost of renting Scotland to grow by 2.1%
• Sales transactions to edge up to 1.25 million across the UK
• Mortgage repossessions to fall to 20,000
House prices in the Scotland will see an average increase of four percent over the course of next year, bolstered by recent changes to Stamp Duty and introduction of Land and Building Transaction Tax, continuing demand and lack of supply of property, according to the RICS housing forecast for 2015. The forecast looks ahead to the next 12 months, across all parts of the housing market, from house prices, sales, rents and repossession levels.
Across the UK, RICS expect all parts of the country to see modest price rises during 2015, at an average of three percent. Meanwhile, the South West, Wales and London will experience the lowest rises with prices increasing by two percent and zero percent respectively.
RICS Scotland director Sarah Speirs commented: “The Scottish Housing Commission report, published earlier this year, highlighted the housing supply deficit and the need for revision around planning, development and delivery of housing in Scotland. What we need is certainty, clarity and confidence from the Scottish Government, to keep us building homes. The Stamp Duty reform should encourage greater number of transactions to underpin public confidence and we hope this will continue with the introduction of Land and Building Transaction Tax in April 2015.”
RICS chief economist Simon Rubinsohn added: “On a UK level, 2014 was a significant year for the property market as a more broadly based recovery took hold. Help to Buy funding helped to support the turnaround alongside the more positive trend in the wider economy. Although the MMR may now be resulting in mortgage lenders being a little more discriminating in the supply of finance, the recently announced, and long overdue reform of stamp duty, is likely to provide a tonic for the market across many parts of the country, particularly for first-time buyers. That said, the bigger affordability issue is not going to go away, highlighting just how important it is to speed up the supply pipeline of new homes over the coming years.”
Having outperformed in the early stages of the recovery, chartered surveyors reported London’s housing market was ‘pausing for breath’ both in terms of pricing and activity towards the end of 2014. Although sales levels remain below pre-crisis peaks in all areas of the country, they are currently particularly low in Northern Ireland, parts of Scotland and some regions in the North of England when compared to previous highs. Despite this, the RICS New Buyer Enquiries data in Scotland and Northern Ireland have recorded stronger and steadier growth than elsewhere.
The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the ‘Help to Buy’ scheme. However, enquiries to rent property in Scotland have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords. As a result, we expect rents to continue pushing upwards over the next twelve months, to a 2.1 percent increase in rents.
Throughout the UK number of houses taken into possession are expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next twelve months, particularly as around ninety percent of new loans are being taken out on fixed rates, which provide some degree of protection against any adverse interest rate changes.