Lack of homes still driving up Scottish house prices

The August 2016 UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) found that 17 per cent more respondents in Scotland reported an increase in prices (up from +8 per cent in July).

Prices have been steadily rising in Scotland since early 2013 and expectations now point to further rises over both the three and 12 month horizons.

A key factor in supporting the rising prices is the continued shortage of stock for sale. This looks set to continue as new instructions declined once more with 10 per cent more respondents reporting a decline in new instructions in August. Nationally, stock on estate agents books slipped for the third month in a row and is now approaching the record low posted in December last year.

But surveyors also said confidence in the Scottish housing market is starting to recover following the immediate reaction to the EU Referendum.

The survey revealed a pick-up in confidence across the UK, following the significant drop in activity and price expectations in the wake of the EU vote.

During August, 17 per cent more respondents in Scotland reported an increase in prices (up from +8 per cent in July). Prices have been steadily rising in Scotland since early 2013 and expectations now point to further rises over both the three and 12 month horizons. At the national level, both prices and sales are expected to rise over both the three and twelve month horizons as activity in the market stabilises.

While newly agreed sales are back in positive territory, 10 per cent more chartered surveyors still expect to see a fall in sales over the next three months. However, sales projections at 12 months have now climbed out of negative territory across all areas of the UK.

New buyer demand increased slightly in Scotland, after three consecutive negative months. 4 per cent more chartered surveyors have reported a fall in demand in August (up from a net balance of -16 per cent in July).

Thomas Baird MRICS, said: “Sales remain strong with a number of high end residential areas achieving above Home Report value. This is largely due to a shortage of supply to the market to meet demand. Uncertainty remains over the housing market post-Brexit.”

Gail Hunter, director RICS in Scotland, said: “Across the UK we are seeing confidence return following the EU Referendum. In Scotland, prices looks set to remain firm in part caused by the lack of stock across the country.

“Uncertainty remains over the market post Brexit, and expected sales have declined yet again, but this week we have seen the First Minister take some very welcome steps, which will help to return some much needed stability to our property and construction sectors. The Scottish Government’s Programme for Government 2016-17 has provided key policies and legislative proposals that could provide much needed certainty in an uncertain world.”

Simon Rubinsohn, RICS chief economist, added: “There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum. Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again. It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence.

“The more assured mood is also reflected in some of the longer term RICS indicators although this in itself could serve to re-ignite ongoing concerns surrounding affordability with five year projections for both prices and rents in the latest survey back to their highest level since May.”