For some time now the Scottish housing market has been under pressure amid concerns about a possible second independence referendum and the worsening relationship with Westminster. In effect the Scottish government, led by the SNP, has been acting like an independent country for some time now and the receipt of new tax powers is a further steppingstone to the eventual goal of the SNP. However, since Brexit there has been a shift away from the south of England and London towards more “value property markets” in the UK.
Glasgow and Edinburgh houses in demand
Research by Hometrack has confirmed that Glasgow and Edinburgh have been the two best performing cities in the UK over the last 12 months. Property prices in Glasgow have increased by 7.9% during the 12 month period ended November with Edinburgh slightly lower at 7.6%. While this in itself does not necessarily indicate a change in market sentiment, there has also been an increase in the number of transactions and this looks set to continue. Good volume behind this jump in Glasgow and Edinburgh house prices would seem to indicate at least a short-term trend is emerging.
UK city house prices
The average increase in house prices across the 20 largest cities in the UK was 6.3% which is up from a figure of just 4.9% 12 months ago. Aside from the likes of Glasgow and Edinburgh there has also been significant interest in areas such as Leicester, Birmingham, Manchester, Liverpool, Nottingham, Bristol and Leeds. London property prices increased by just 2.7% over the 12 month period in question although the Scottish housing situation was slightly soured by the 3.7% reduction in Aberdeen prices (mainly as a consequence of the weak oil price over the last couple of years).
It is too soon to say with any great confidence whether this is a significant change in historic trends but there is no doubt that Brexit has made people think again. Amidst the doom and gloom of Brexit perhaps Scottish independence does not look to bad at this moment in time? With the SNP government extremely keen on retaining European links this may be one of the reasons behind the recent rise in Glasgow and Edinburgh house prices.
It has to be said that property prices in the U.K.’s 20 largest cities have performed much better than many would have expected in light of Brexit. The shift away from the south of England and London to more “value” markets in the Midlands, North of England and Scotland has been on the cards for some time but has taken a while to come through.
There is no doubt that investors looking for capital appreciation have favoured the south of England and London while those looking for significant rental income have looked further afield. The next few years will be challenging for the UK economy and as a consequence the UK housing market. Will we continue to see a trend away from the south of England and London? Will investors return to these lucrative hunting grounds in years to come once Brexit has been agreed or will the Scottish housing market remain a firm favourite?
UK house prices have remained relatively strong despite the doom and gloom scenarios painted in light of the Brexit referendum result in 2016. Is the UK simply treading water prior to a massive fall in house prices? Or is there significant demand behind-the-scenes?