It may surprise many to learn that the Scottish property market is the best performing in the UK over the last 12 months and currently on a month by month basis. Annual growth of 5.6% in the 12 month period to April 2018 is well ahead of England at 3.7% and Wales at 4.4%. The average property in Scotland is now worth £148,952, in Wales the figure is £156,495 with England topping the table at £243,639. If we look at London by itself, as London is effectively a stand-alone property market, house prices now average £484,584 which is just 1% up on the 12 month period to April 2018.
Month by month growth
It is interesting to see that Scottish property prices are currently outperforming the rest of the UK on a month by month basis. The current growth rate in Scotland is around 2.5% which compares to just 1.1% in England and 1.6% in Wales. While many will point to a period of underperformance by the Scottish property market, leading to this catch-up situation, it will be interesting to see whether this trend does continue. At the moment the Scottish government is at loggerheads with its UK counterpart in relation to Brexit and additional powers that devolved parliaments will welcome when the UK eventually leaves the European Union on 29 March 2019.
House sales figures well down
It is worth noting that there has been a significant reduction in the number of properties sold over the last 12 months. The February 2018 figure for England shows a 15.4% reduction on the same period 12 months ago. London figures for the same period are down 23.9% with Wales showing a fall of 8.6% in the number of transactions. In the 12 month period to January 2018 the number of Scottish property transactions fell by 7.4%. Transaction numbers fell by 10% in the first three months of 2018 in Scotland thereby the comparable February 2018 figure is likely to be nearer 8%.
Lack of housing stock
There is no doubt that Brexit is causing problems for the UK economy and the UK property market. Whether the ongoing reduction in transaction numbers is wholly as a consequence of Brexit is debatable. There is also the issue that a lack of suitable housing stock is creating demand for any stock available, pushing prices higher, and creating a potentially false market. The reality is that many people have concerns about Brexit but in the long term many see benefits. As a consequence, the ongoing softening of the UK property market as a whole does not seem to be prompting a rush to the exit door and a flurry of new housing stock onto the market.
If Scotland was to gain independence then the eventual goal would seem to be re-joining the European Union and the single market. While this may be some way off, and independence is by no means certain, the Scottish property market could be an interesting long-term play on the long-term success of the European Union. While politicians continue to bicker the fact is that the democratic will of the UK electorate has spoken. The UK will be leaving the European Union, trade deals will have to be struck on a one by one basis and nobody quite knows how this will impact the UK economy in the short, medium and long-term. As a consequence, it seems that many people have decided to retain their properties for the time being rather than sell them into a “buyer’s market”.