Scottish value card is trumping politics in the post EU Referendum housing market

The value card is trumping politics in buying decisions in the post EU Referendum era in Scotland and the market is performing better than predicted, with more buyer activity compared with the same period last year, according to new research revealed at Savills Scottish Property Outlook in Glasgow, attended by 350 property specialist from across Scotland.

Savills own data reveals there has been a 30% increase in new buyers who registered in July and August, compared to the same period last year, with a third coming from outside Scotland. In addition there was a 40% rise in viewings in the same period. 

Andrew Perratt, Savills Head of Residential in Scotland said:  “While it is relatively early days since the EU referendum, and question marks remain with regard to the speed, terms and conditions of our exit from Europe, a picture is beginning to emerge which reveals the Scottish housing market to be in good shape.

“Our feeling is that Scottish buyers have become resilient to a fast-changing political landscape. Having seen two Referendums, a General Election, as well as local Scottish elections, many are now keen to move on with their lives.

“Scotland has always attracted buyers from south of the border, and much further afield, particularly those with pre-existing Scottish connections due to the quality of life and comparative value for money.  It is now possible to buy a detached five bedroom Victorian villa in the sought-after Glasgow suburb of Pollokshields for the price of a two bedroom flat in Islington, London. 

“Those with links north of the border who are living in London and the South, may be concluding that now is the time to sell, and invest their considerable equity in Scotland, taking advantage of the record value gap. Indeed, value appears to be more important to buyers than politics in the current market.” 

Faisal Choudhry, Head of Residential Research in Scotland said:  “It will be interesting to see how this activity impacts value in the longer term, but so far our Prime Index reveals that values are currently 1.3% higher than the same period last year.

“For the time being, the fundamentals for a healthy residential property market are in place. Mortgage regulations are tight and lending rates are favourable. In addition, LBTT rates are benefitting the market below £400,000, which comprises the bulk of Scottish residential sales.

“An exception to this generally positive outlook is the Aberdeen area market, which after seven years of phenomenal growth has seen a 12% annual drop in transactions, impacting Scotland’s overall residential property market. In addition, according to the latest research the market above £600,000 outside Scotland’s traditional hotspots is struggling to adjust to the higher rates of Land and Buildings Transaction Tax (LBTT).   For example outside Edinburgh and Glasgow, sales above £1m are currently 20% below the level two years ago.

“The length of time houses take to sell is a useful indicator of market strength.  Across Scotland’s cities, properties are staying on the market for an average of 18 weeks, compared to 26 weeks during the downturn which is a reduction of 30.77%”.

Savills research follows data published in recent weeks revealing that the performance of the services, manufacturing, employment and retail sectors since the EU Referendum has been encouraging. According to the Office for National Statistics (ONS), the number of people unemployed in July this year fell by 8,600, compared to the previous month. The retail sales figures (often used by commentators as a gauge of consumer confidence) reveals a monthly 1.4% increase in July. At the time of writing, the value of the British Pound compared to the US Dollar is at the lowest point for 31 years, making UK exports relatively competitive, including real estate for overseas purchasers.

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BDC 305 Jun 2023