The news from the Registers and all property professionals is that house prices in Scotland are rising at the fastest pace for 14 years!
Although Spring is usually a busy period in the housing market, the number of transactions in Scotland is sharply up in comparison to previous years. 2021 has seen the market being turbo charged by the pressures of the lockdown, extra savings and the opportunities of continued home working.
The figures and hot market just now seem to reflect a number of factors:-
The number of new build properties fell sharply after 2008 and it has only been returning to a healthier level in the past couple of years. New builds are important in meeting the demands for a rising population as well as pressure for better quality housing.
First time buyers
First time buyers fell away when it became tougher to get a Mortgage and deposits had to increase. The share of households in private rented accommodation has nearly doubled during the period following the 2008 crash. Young people are getting on to the housing ladder at a later age, and first time buyers are vital to fuel moves further up the property ladder. This means that one person newly coming on to the property ladder typically leads to 4 or 5 moves further up the chain.
Market closure in 2020
The housing market was forced to close last Spring and so there has been pent up demand. Although there was lockdown earlier this year, the property market was not forced to stop.
Having been locked down and often working from home, many people realised that they don’t havr enough space inside their homes as they would like. People living in flats have seen the appeal of a garden or want to be nearer parks. This explains why the prices of flats has been rising less fast – in the year to March the average price of a flat has increased by 7.6% whereas the average price of a terraced house has increased by 13.3% in the same period.
With time of their hands, homeowners have been sprucing things up. DIY sales have been strong and homes being put on the market are looking good.
For people who have continued to earn, with less to spend going out or holidays, they have been able to save a lot more and this has led to bigger deposits. Savings are also essential for people offering over the Home Report price, as Lenders limit their loan to the Home Report valuation and in hotspots, prices have been as much as 15-20% or more above that price.
For many of those who have become used to working from home, it is a lifestyle change that they want to continue. If you don’t have to commute at peak time 5 days a week, you may well want to look for a more spacious home out of the city, where your money buys more space and nearby amenities. This explains the popularity of local property markets outside cities, but within easy reach such as Ayr, East and West Lothian, Falkirk and Lanarkshire.
For some people remote working can mean a bigger move still. A home office with a sea view in the Highlands is attracting a lot of interest as people depart cities, and this is extending to people from England as well.
With regard to everything above, it remains the case that markets are local and so to say that the average Scottish home is worth £167,000 doesn’t mean much at all.
It is important to think of the market where you are buying or selling and the Local Authority figures reflect some of these pressures and trends. For example, although Edinburgh remains the most expensive Council area at £286,000 for the average home, its prices have been rising by 4.1%, considerably under the Scotland wide average rise of 10.6%.
Will this market continue to stay hot? Of course, no one can know the answer to this and prices can go down as well as up. However, according to property experts at various Estate Agency firms, we should continue to watch demographic pressures, sustained low interest rates and continued tight new build supply. On this basis, many experts foresee prices continuing to rise.
In such a competitive market, it is important to consult solicitors who have experience of dealing with offers on a day to day basis and all of our conveyancing team have the necessary expertise to assist in this regard, covering areas the length and breadth of the country. Check out our testimonials and our Google reviews to see what our clients think of us, and then get in touch using our online enquiry form to see what we can do for you!