RICS: Scottish housing market outlook strongest in 18 months
The short-term outlook for the Scottish housing market has improved markedly following the General Election result with price and sales expectations for the three months ahead increasing sharply, according to the Royal Institute of Chartered Surveyors (RICS).
The December 2019 RICS Residential Market Survey recorded a net balance of +36% of respondents in Scotland who expect prices to rise over the next three months and a net balance of +34% who expect sales activity to increase in the same timeframe.
Both figures represent a marked rise on the previous survey. Indeed, both the price and sales expectations balances are now at their highest levels since July 2018.
This renewed optimism follows a market slowdown at the end of last year when Scottish surveyors saw lower levels of newly agreed sales, a flat picture regarding new buyer enquiries, and a continuing reduction in the number of properties becoming available for sale.
However, with the General Election out of the way, the expectation is for prices to increase and sales activity to rebound.
A concern for surveyors remains on the supply side, with the lack of properties coming onto the market creating an imbalance between supply and demand that could act as a drag on activity in the months ahead.
However, anecdotally, some respondents say that they expect more potential vendors to now consider putting their homes on the market.
Looking 12 months ahead, Scottish surveyors are amongst the most optimistic in the UK regarding both prices and sales activity. A net balance of +75% of Scottish respondents expects prices to be higher in a year’s time and a net balance of +68% expects sales volumes to increase.
Ronald Smith, MRICS of Shepherd Chartered Surveyors in Stirlingshire and Clackmannan, said that market behaviour continues to be driven by low levels of supply.
Phiddy Robertson, AssocRICS of Galbraith Group in the Highlands and Islands, added: “The election put the market on hold, but with a greater degree of certainty we expect a post-election bounce in instructions and sales”.
Linda Gove, MRICS of J&E Shepherd in St Andrews, said: “After a relatively quiet run in to Christmas we are seeing an upturn in instructions again. Prices have remained buoyant in this area driven by demand exceeding supply and we expect this trend to continue in the foreseeable future.”
Simon Rubinsohn, chief economist of RICS, added: “The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome. Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.
“However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.
“The ongoing lack of stock on the market remains a potential drag on a meaningful uplift in activity although the very modest increase in new instructions in December is an early hopeful sign. Given that affordability remains a key issue in many parts of the country, the shift in the mood-music on prices is a concern with even London expectations pointing to a reversal of course both over the coming months and looking further out.
“This highlights the critical importance of the government addressing the challenge around housing supply particularly with the gradual phasing out of the Help to Buy incentive.”