House prices remain firm despite sales, demand and new instructions stalling across Scotland

A lack of new houses coming on to the market, presenting buyers with limited choice, is a key factor in dropping activity for the Scottish housing market, with headline indicators on demand, supply still downbeat, the April 2019 RICS UK Residential Survey has revealed.

Brexit uncertainty also remains a constraint, meaning little change in momentum is anticipated near term but further out expectations are at least slightly more positive.

Despite all this, Scottish house prices remained firm in April, with a net balance of 28 per cent more respondents reporting an increase.

However, the regional breakdown across the UK shows prices under pressure in London and the South East, while the South West has now consistently fallen for the past six months. At the same time, only Northern Ireland and Scotland continue to buck the trend, with respondents reporting a further rise in prices.

New buyer interest across Scotland has deteriorated so far in 2019, with a net balance of -26 per cent of respondents reporting a decline in demand. On the back of this, the survey’s indicator on newly agreed sales turned negative, with a net balance of -19 per cent more chartered surveyors reporting a drop in transactions during April.

Peter Drennan MRICS, Edinburgh, Allied Surveyors Scotland, said: “Quieter, but limited supply meaning prices holding up, especially at mid-market levels. The underlying shortage (of properties) continues.”

Looking ahead, near term sales expectations for Scotland remain negative, and, expectations still point to a flat or declining sales trend across all parts of the UK in the coming three months. Further out, however, a headline net balance of +13 per cent of contributors anticipate sales will begin to pick up to some extent across the UK over the next twelve months.

In the Scottish lettings market, tenant demand continues to climb while landlord instructions continue to dwindle, extending a run of successive quarterly declines dating back to the beginning of 2016. Rents are projected to rise to by around 2 per cent at the UK national level over the coming twelve months, with growth seen accelerating to average 3 per cent per annum over the next five years.

Simon RubinsohnRICS chief economist, said: “Across the UK, although there are signs of greater realism on pricing from vendors, there is little conviction in the feedback from respondents to the survey that activity in the housing market will pick-up anytime soon. Significantly, the key RICS buyer enquiries indicator remains subdued and sales expectations looking a year out are only modestly positive.”

Tags: RICS

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