Over the next 12 months there will be serious questions asked of the Scottish electorate with the Scottish National Party pushing for independence while other political parties wish to remain part of the Union. This is an issue which has been ongoing for some time now but one which will come to a head next year. Many are now starting to ask the question, will independence impact the Scottish property market?
If you put your political bias to one side and look at the Scottish property market in pure and simple financial terms, there are a number of aspects to take into consideration.
While the traditional property hotspots across Scotland, such as Edinburgh, Aberdeen, etc, have all performed admirably over the last 12 months there is no doubt that performance has been mixed. On one hand we see Edinburgh property pushing to new highs and greater demand for seaside properties while at the same time in the back of investor’s minds is the oncoming vote on independence.
It would be true to say that the vast majority of investors in Scotland, both those living in Scotland and outside of the country, believe that Scotland will remain as part of the United Kingdom but what if the independence vote goes in favour of the SNP’s wishes?
Quote from PropertyForum.com : “If you look in the UK property news you will see talk of further increases to come, easy money and a raft of investors waiting to buy yet more property……but surely it cant be that simple?”
Politicians will mention the banks, universities, green energy but the fact is Scotland is at the moment very much dependent upon North Sea oil. There’s been much debate as to whether North Sea oil receipts will rise or fall in the short to medium term, how this would impact Scottish government spending and indeed whether it is a step too far and a risk not worth taking.
The fact remains that the Scottish property market, and indeed any other property market, is to all intents and purposes based upon availability and affordability. The availability factor, as with much of the UK, has seen manipulation of new housing builds to maintain forward momentum with prices. While looking at the affordability factor, first-time buyers are effectively priced out of the market in many areas of Scotland due to a difficult economy and rising prices.
If Scotland was to go independent there has been great debate on how this would impact the economy and indeed whether taxes would rise, disposable incomes would fall or would the country be stronger on its own?
Uncertainty is a killer
Whether you believe Scotland will go independent, whether you believe the economy is better off alone or part of the United Kingdom, the uncertainty surrounding Scotland is impacting investment. One element of the Scottish property market which is often overlooked is the fact that investment in new jobs leads to more affordability, more disposable income and more demand for properties. At this moment in time, and this is a matter which has been debated on numerous occasions, many international companies are holding back on future investment in Scotland to see whether the country does go independent.
This uncertainty is not good for the investment markets, dangerous for the property sector and indeed as we touched on above, can lead to multinational companies holding back on investment. The general consensus at this moment in time seems to be that independence will not win the day but if opinion polls see a surge in support for independence this could very well spook some investors. Once the uncertainty is gone, whether Scotland goes independent or stays a part of the United Kingdom, asset valuations can be determined on factual evidence rather than speculation.