In recent times the Scottish property market has often been overlooked in favour of London and other prominent areas of England. This trend is starting to change and to all intents and purposes it was the 2014 Scottish independence referendum which put Scotland firmly back on the map. This caused confusion, concern and often mayhem in markets but, with the threat of another Scottish independence referendum on the horizon, what does 2017 hold for the Scottish property market?
A recent report by real estate firm Knight Frank confirmed that property prices in Scotland fell by 0.4% between October and December. The year on year average price of housing stock in Scotland has also fallen by 1.1% although interestingly there is still relatively strong demand. The volume of transactions in the year to November was identical to 2015 and 12% higher than 2014. So, this would suggest that while prices have slipped there is underlying demand for Scottish property.
When you also take into account the fall in the value of sterling on the currency markets, as well as the added concern about a new Scottish independence referendum, this could make Scotland very attractive on a long-term view. It is also worth noting that property prices in Scotland are still 20% below their peak of 2007 just prior to the worldwide economic collapse. Could the current concern and confusion surrounding Scottish property have created the ultimate buying opportunity?
Since the SNP gained control of the Scottish parliament there has been an ongoing battle with Westminster as the party pursues its main goal of Scottish independence. In some ways the SNP may have taken its eye off the ball regarding the economy and the governing of Scotland, with recent NHS and education figures extremely disappointing, but this can be rectified. While still by far and away the most popular party in Scotland, the SNP will need to improve its day-to-day governing of Scotland to remain dominant in the future.
At this moment in time Brexit seems to be headline news across the UK and the SNP is certainly fighting the corner of Scotland. Whether or not you agree with the “go it alone” policy currently being pursued by the SNP it has certainly put Scotland on the map. Political uncertainty in Scotland has affected investment markets such as real estate but if the SNP can refocus on day-to-day governing this should reduce the political risk going forward.
When you take into account the fact Scottish property is in general still around 20% below its peak of 2007, and the fall in sterling has encouraged a new wave of foreign investors, there are many parts of the Scottish property market which look good value. We may see further political uncertainty in 2017, which could affect property prices in the short term, but if you take a long-term view there does seem to be some good value.
The Scottish economy and the Scottish property market will only calm down once the issue of independence has been “kicked into the long grass” for the next generation. Until then we may see volatility across all investment markets, the economy and the political scene. However, if you dig deep there are some interesting opportunities beginning to emerge in the Scottish real estate market. Patience could be the name of the game in 2017.