RICS: Scottish house prices continue to rise but uncertainty lies ahead

House prices in Scotland rose for the sixth consecutive month, but new buyer enquiries softened after strong growth in January, according to the February 2020 RICS Residential Market Survey.

The latest survey reveals that a net balance of +35% of Scottish respondents saw an increase in house prices, which was higher than the UK average of +29%.

However, the picture regarding new buyer enquiries and instructions to sell was flat, with net balances of 0% and -3% reported respectively. Newly agreed sales were also said to have fallen in number, with a net balance of -10%.

That said, surveyors in Scotland remain relatively upbeat at present with regard to the near-term and longer-term outlook.

A net balance of +26% of Scottish respondents expects house prices to rise in the next three months and a net balance of +24% expects sales activity to rise in the same timeframe. Looking 12 months ahead, a net balance of +57% of respondents expects prices to increase over the year, and a net balance of +52% expects sales to rise.

However, concerns have been raised by property professionals about the impact of coronavirus which although yet unknown, could adversely affect viewings and the traditional spring house selling season.

Kieran Bonner, MRICS of J&E Shepherd in Stirling, said: “Instructions in February appeared to be quieter after a busy January period.”

David Cruickshank, MRICS of DM Hall LLP in Elgin, added: “The market still reflects uncertainty. Brexit is ongoing with the full effect still more than a year away. The COVID-19 virus is also likely to negatively affect the economy and market if it spreads in an uncontrolled manner.”

In the lettings market, demand for rental properties in Scotland rose in the three months to February (seasonally adjusted quarterly series), with a net balance of +46% of respondents citing an increase. At the same time, the balance for landlord instructions rose, though only modestly (a net balance of +9%). Despite the slight pick-up in landlord instructions, there is still a mismatch between demand and supply, and rents are therefore expected to rise in the next three months.

Commenting on the UK picture, Simon Rubinsohn, RICS chief economist, commented: “It is encouraging that the results of the latest UK survey continue to show a positive trend both in terms of potential buyer interest and new instructions to agents. Indeed, this is the first time since 2014 that new supply to the UK market on the RICS indicator has increased for three consecutive months.

“Inventory levels are still at historically low levels despite this but the firmer trend in appraisals suggests that the picture could improve over the coming months providing the coronavirus doesn’t become more of an inhibitor of activity in the sector. For now, at least, feedback around expectations are consistent with activity levels continuing to strengthen albeit relatively modestly.”

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