HOUSE prices in Scotland continued to fall according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey with further falls expected over the coming three months.
A net balance of -20% of respondents in Scotland said that house prices fell over the past three months, compared to -17% in August, and -9% in July.
In saying that, Scotland though continues to be in a stronger position than most other UK regions. The overall UK price balance sits at -69%, and all regions of the UK had more negative balances than Scotland, except for Northern Ireland.
However, surveyors’ outlook for the market in Scotland in the short-term deteriorated. A net balance of -30% of respondents in Scotland expect prices to decline over the next three months.
Looking at demand, this figure worsened through September. A net balance of -37% of Scottish respondents reported that new buyer enquiries fell. This is compared to -29% the month previous.
Regarding supply, a net balance of -16% of Scottish respondents reported a fall in new properties coming onto the market in the most recent survey,
The limited supply and demand are unsurprisingly impacting on sales with a net balance of -62% of surveyors in Scotland reporting a decline in sales through September. Given the market conditions, respondents expect sales to
The lettings market is in sharp contrast to sales, and demand is continuing to rise. A net balance of 29% of survey participants saw an increase in tenant demand in the lettings market in September. Meanwhile, the feedback around landlord instructions continues to highlight a scarcity of listings becoming available on the rental market (-50%). Given this backdrop, rents are expected to be pushed higher, with a net balance of 29% of Scottish respondents pencilling growth in rental prices over the next three months.
In terms of the sales market, Alan Kennedy MRICS, of Shepherd Chartered Surveyors, in Fraserburgh commented: “The local market has slowed in recent times though buyer demand in some sectors remains strong and realistically priced properties are still selling at or around Home Report values. Local estate agents are showing a lot of price reductions, indicative of difficult market conditions.”
Ian Morton MRICS of Bradburne & Co, in St Andrews added: “The slowdown in activity is marked and offers below the asking price are becoming more common. It is turning to a buyers’ market as values lower.”
Discussing the rental market, Craig Henderson MRICS of Graham & Sibbald LLP in Ayrshire said: “We continue to see landlords opting to sell investment property due to the inability to increase rents to match their increasing costs. The Scottish Government’s restriction on rental increases is causing landlords to depart the rental market, and will result is less availability and higher rents.”
Commenting on the UK picture, Tarrant Parsons, Senior Economist at RICS, said: “With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September. Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period. As such, it appears there is little prospect of trends deviating much from the recent picture in the immediate future. That said, the outlook a little further ahead has improved slightly, with twelve-month sales expectations moving out of negative territory for the first time in several reports.”