This evening it has been announced that Scotland’s First Minister Nicola Sturgeon has penned a letter to Theresa May, the Prime Minister of the UK, requesting the right to hold another referendum on Scottish independence. Earlier this week we saw the SNP join with the Green party to push through a vote for a second independence referendum by 69 votes to 59. So, as we stand on the verge of another constitutional crisis in the UK what impact will this have on the Scottish property market?
There are been many articles over the last few weeks regarding Scottish independence and the potential impact upon the Scottish property market. Land Registry data shows that in times of uncertainty Scottish house prices have fallen or at best underperformed the rest of the UK. When there was “light at the end of the tunnel” it seems that investors were keen to invest in Scottish property and it was certainly much more buoyant. This came at a time when the Scottish economy was, compared to the economy today, relatively strong.
There are growing concerns that the economic situation in Scotland is being overshadowed by a determination to push through Scottish independence. There is no doubt that Scotland could be an independent country but with the oil price extremely low and a potential £15 billion budget deficit perhaps now is not the time?
It was also evident at the last Scottish budget that the SNP will be looking to milk the middle and higher earners to shore up the Scottish budget. There are already signs that investors are losing interest in the Edinburgh property market which is seen by many as the bellwether of Scottish property. This is where the money is, this is where the jobs are and if this increase in taxes does sway some businesses and business people to look over the border, where would this leave Scotland?
It is also worth noting that Scotland has a serious problem with an ageing population. Hence the Scottish government has been extremely welcoming of young Europeans looking to Scotland for employment. If Scotland were to find itself outside of the European Union and the UK union this would be disastrous. There are pros and cons to both sides of the argument but there are now serious concerns that the Scottish property market could be caught in a pincer movement which, even if a referendum was called and lost, could still carry on for many years to come.
Is there a final solution?
At this moment in time, the SNP government and its ally the Green party are in total control of the Scottish parliament. There are concerns they will continue to call referendum after referendum after referendum until they get independence. The UK government is unlikely to yield to this second call for a referendum and while legally the Scottish government has very little room for manoeuvre, it can still cause many problems in Westminster.
As we have mentioned time and time again, property markets are most concerned about uncertainty because if they are aware of a worst-case scenario or the best case scenario then at least they can price assets accordingly. This potential leap into the dark of a second referendum, with Brexit also going through, could cause unprecedented uncertainty in the Scottish property market. Where would this leave Scottish property prices?