Lack of stock causing Scottish house prices to soar

House prices continue to rise across Scotland, driven by a long-term shortage of stock, according to the latest RICS UK Residential Market Survey.

In November, 45 per cent more chartered surveyors saw prices rise across Scotland, which is an increase on last month and represents a strong positive net balance. This is the strongest figure for Scotland since June 2014.

This is despite a rise in new instructions, giving it a positive balance after the turbulent results of the year so far. Although, it was with a very small net balance of just 2 per cent saying new instructions had increased. Scotland is following the main trends of the UK with new buyer enquiries outstripping new instructions.

Anecdotal evidence from respondents suggests that despite the small increase in new instructions this month, the long-term lack of stock is holding back transaction levels and agreed sales were flat in November across the UK as a whole, with Scotland displaying a continuous upwards trajectory from June of this year and November’s results. Last year’s introduction of LBTT was also mentioned as holding back the prime market in Scotland.

Although supply has been holding back sales, respondents across Scotland are positive on the outlook for the coming months with 34% more chartered surveyors expecting to see a rise rather than a fall in activity – this is up from 18% in October and is the highest reading since August.

Sarah Speirs, RICS in Scotland director said: “I can’t recall a set of comments in the residential survey which have so frequently drawn attention to lack of stock on the market. Given this, it is hard not to envisage prices continuing to climb upwards as we move through the early stages of 2016. It remains to be seen if the government will set initiatives to drive up the rate of new build and the impact that it will have on the market. We await the Scottish budget announcement on 16 December to see if the Government will emulate the Chancellor’s emphasis on housing.”

“A material rise in the cost of borrowing has the potential to take some of the momentum out of the market, but there is, at this stage, little indication that the Bank of England is minded to take a steer from the US Federal Reserve. Moreover, all the signals from the Bank still point to a very gradual upward trajectory for base rates when it eventually decides to move policy in this direction.”

Adrian Stott FRICS of J and E Shepherd has said: “Continuing lack of supply leading to competitive offers in excess of asking prices.”