The last couple of years have been very traumatic for the Scottish economy which had an obvious impact upon the Scottish property market. We have experienced the Scottish independence referendum, which seemed to drag on forever, and then we had the collapse in the oil price which had a massive impact upon areas such as Aberdeen. Against this background it was difficult for the Scottish property market as a whole to make any real progress and then the authorities introduced a heavier tax burden on properties towards the higher end of the market. However, over the last few months we have seen an increase in activity and there are signs of life again!
In the 12 months ended March 2016 there was an increase of 8% in the number of residential property transactions reported across Scotland. Many believe this is a turning point for the Scottish market which suffered from the issues that we have detailed above. There would appear to have been a number of positive factors coming into play such as a great number of cash buyers, strong buy to let demand and more activity from the so-called grey pound.
When you also take into account the various Help to Buy Schemes introduced by the Scottish and UK governments it begins to paint a much more positive picture of the Scottish property market. Indeed, competition between the UK government and the Scottish authorities has been intense since the independence referendum with property buyers benefiting from the additional assistance available.
Lagging markets respond
Over recent times we have seen areas such as West Lothian, East Ayrshire, Glasgow City and North Lanarkshire lagging behind the average performance of Scottish property. Thankfully the last 12 months have seen these particular areas moving into “catch-up” mode with more liquidity and more demand. At the same time the likes of Renfrewshire, East Lothian and Edinburgh continue to move ahead and outperform the rest of Scotland.
It is certainly encouraging to see some of the previously depressed markets beginning to build momentum and against the background of a gradual economic recovery there would seem further upside at least in the short to medium term. At this moment in time investors seem to have discounted threats of a second independence referendum within the next couple of years but no doubt this issue will come back to grab the headlines again.
Savills has forecast annual growth of 3% for Scottish property during the whole of 2016. While this may not be headline grabbing momentum it does seem to be something of a turning point and positive move. There were some warnings in the report with concerns about possible interest rate rises in the short term, stricter lending conditions and ever-growing political appetite to heap further tax liabilities on the higher end of the property market.
Whether or not the Scottish property market is just now moving out of the investment drought brought about by the independence referendum is debatable. However, what is certain is that demand for Scottish property and transaction numbers have improved over the last 12 months. Long may this continue….