Lack of supply drives Scottish house price hike

The lack of new houses being built in Scotland is pushing prices rapidly upwards, according to the latest RICS UK Residential Market Survey.

Throughout Scotland, the supply versus demand imbalance led to 21 per cent more surveyors reporting rise in house prices during March and 27 per cent more expecting prices to increase over the next three months.

Overall the demand for residential property remained steady in Scotland, with 11 per cent more surveyors reporting an increase in new buyer enquiries, and 9 per cent more surveyors reporting an increase in newly agreed sales during March.

Sarah Speirs, director RICS Scotland, said: “The initial boost given to the housing market by the Help to Buy scheme has begun to dissipate and activity levels have slipped back. The new Land and Building Transaction Tax was implemented at the beginning of April we will monitor the potential impact this has had on all market levels.

“There have been indications of price increases in recent months, as the supply of stock to the market continue to fall. Anecdotal evidence does suggest that election uncertainty and the impact of the drop in oil prices may be having some impact on the market, but underlying the trends visible in the latest survey indicates a very real housing crisis which will urgently need to be addressed by the next UK government.”

Northern Ireland continues to outperform the rest of the UK with the strongest house price growth in March and the highest price expectations over the next three months. However, across much of the rest of the UK, particularly in Wales and Scotland, price gains over the next three months are expected to be much more moderate.

Robbie Buchanan, of Graham + Sibbald, said: “Demand is outstripping supply at present and this has resulted in quicker sales and a modest increase in prices levels for houses.”

In London, a lack of prospective buyers saw enquiries and the number of agreed sales both fall for the 11th consecutive month and 24 per cent more surveyors reported a decline in the number of new properties coming onto the market for sale.

However, compared to the start of the year when 42 per cent more surveyors reported a decrease in prices, just 13 per cent more surveyors saw prices fall in March and across the whole of the UK, the average surveyor sold 19.5 properties – reflecting activity since Autumn- although it remains some way down on where it was in the early part of 2014.

Dr. John Boyle, director of research and strategy at estate agents Rettie and Co said: “The issue of supply and demand is definitely having an effect on the Scottish property market.

“Our analysis shows that the amount of new homes being built both by the private sector and local authorities is at historically low levels and is around 20,000 less per year than the Scottish Government envisaged.

“This is down to a lack of investment from private investors and austerity spending from local government.”