Friday, 10 June 2016
Drop in demand as activity in Scottish housing market dips during May
Activity in the Scottish housing market slowed during May, as a decline in new properties coming on to the market was accompanied by a drop in new buyer enquiries. A net balance of 13 percent more chartered surveyors reported a fall in demand while a net balance of 8 percent saw sales tail off last month.
Despite softer activity, house prices in Scotland remained firm and a net balance of 15 percent more respondents expect prices to climb in the next few months. This is due, in part, the continued decline in supply, with 22 percent (net balance) of surveyors reporting a decrease in new properties coming on the market in May. Supply has now failed to keep up with demand, even during more quiet months, for much of the past 3 years.
While prices are continuing to rise modestly across the rest of the UK, this trend looks set to fade, with 10 percent more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012. London and East Anglia are expected to be worst hit with 43 per cent (net balance) and 33 per cent (net balance) of respondents saying that prices will fall over the next quarter.
Sarah Speirs, Director RICS in Scotland, said: “Across the UK it appears that we are looking at a short term drop in house prices caused by the uncertainty resulting from the forthcoming EU Referendum, coupled with a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties. In Scotland, prices look set to remain firm, despite a dip in activity, as demand continues to outpace supply.
“We urge the new Scottish Government to make the delivery of housing, across all tenures, a priority during their term. From new supply, to improving the poor condition of the country’s existing housing stock and developing plans to bring back into use Scotland’s 27,000 long-term empty properties, more needs to be done to address the current imbalance.”
The survey revealed that in the longer term, while house prices are thought likely to regain momentum, rental growth looks set to outpace house price inflation.
Craig Henderson MRICS, Graham + Sibbald, commented: “In recent weeks a number of clients have raised the Brexit issue and questioned the potential impact if the UK chooses to leave the EU. Some concerns have been raised if this was to be the outcome, resulting in some hesitancy on the part of buyers.”