The Property Market in Scotland
Since the property market re-opened last year, no one could have predicted the impact that the pandemic would have on UK house prices. Here at Caledonia Bureau we have had one of our most buoyant years’ and as a result have opened up Caledonia Bureau Glasgow.
Before we look at Glasgow’s west end, let’s look at what’s happening in Scotland as a whole.
Looking at figures from the Registers of Scotland (RoS) – they reported this week that the average residential property in Scotland now stands at £194,100. Although this is good news for homeowners, for those wanting to get onto the property ladder it’s going to be even more challenging. This figure is an increase of 7% since 2019-2020 and a 25% rise on the 2007 pre-financial crash average of £154,800.
The RoS reported that house prices rose by 5.4% between April and May, compared with an increase of 0.7% in 2020. We’ve noticed that family houses are high on buyers’ wish lists. and figures show that terraced properties showed the largest increase in average price, rising by 13.4% in the year to May 2021 to an average of £145,290. The area that saw the highest price increase was Inverclyde, up 20.2% to an average of £111,911 whereas property in Edinburgh was the most expensive.
Over the last year, there were 95,500 property sales across the Scotland with a steady climb resulting in the highest number of purchases since December 2007. In March the number of house transactions jumped just under 100% on March last year when lockdown was first imposed.
Glasgow – A unique market
Family homes are in particularly high demand as many people look towards a permanent full or part-time home working arrangement and so require an additional bedroom to use as a study. What’s more, with many of us locked down for months at a time since last March, our gardens were our sanctuary. As a result, people have realised the importance of having access to outside space. However, the West End of Glasgow is a unique market – and with professionals and students seeking homes in this vibrant, trendy area and venues once again opening up, apartments are still in high demand.
Prices across Glasgow are the steepest we have seen them in more than 10 years with a sharp rise in March this year. With fewer properties on the market due to Covid restrictions, this has further driven prices up. The market is still catching up with the spike in people looking for homes to accommodate their ‘new normal’ and shift in priorities, along with low mortgage rates, the introduction of the Mortgage Guarantee Scheme and the LBTT break. The result is an incredibly buoyant, sellers’ market.
Mortgage rates remain close to all-time lows but with house prices currently at record all-time highs, it’s even more difficult for prospective first-time-buyers to raise the required deposit.
In Glasgow, we have seen around 80% of properties attracting multiple bidders and premiums of up to 20% over valuations are commonplace. We have also noticed a rise in buyer enquiry levels compared to this period last year, particularly from those looking for family homes close to primary and secondary schools as the pandemic resulted in many families moving to houses that would accommodate home working.
What’s the outlook?
Despite house prices rising, industry experts from RICS don’t believe that the bubble will burst – but the post-pandemic demand will continue to accelerate house prices, albiet at a slower pace going forward. It’s believed that the market will slow down next year but will grow steadily in Glasgow.
Simon Rubinsohn, chief economist at the RICS, believes that while the residential market looks overvalued, “its overvalued for justifiable reasons”. He has suggested that Scotland’s biggest cities compare reasonably favourably with many others across the UK. “What you got at the moment is a high average price to average earning ratio and you got low servicing costs, so if you had high price to average earnings ratio and servicing costs, while mortgages were going up sharply, then you might question if the fundamental support for the housing market is in place.”
He has predicted that interest rates and mortgage servicing costs will remain low for the next 12 months at least. “The key thing is can you find the deposit to put down and actually purchase – then you pay the servicing costs – the deposit is the big issue and the servicing costs are much more manageable than they’ve ever been.”
Innes Allan, Glasgow Partner, Caledonia Bureau
