RICS Residential Market Survey Scotland, November 2022
ACTIVITY in the Scottish housing market continues to weaken, with higher interest rates and a difficult macroeconomic outlook both taking their toll on buyer sentiment, according to the November 2022 RICS UK Residential Survey.
For the seventh month in a row, buyer demand in Scotland continued to fall, with the net balance coming in at -35%. Whilst this is less negative than the -44% reported in the previous month, the market remains in a firmly downward trend with indications that this will continue in the near term. For agreed sales, a net balance of -58% was reported over this survey period indicating a continued decline in sales activity.
The survey’s measure of new instructions coming onto the sales market in Scotland also remains in negative territory, posting a net balance of -36%.
When it comes to house prices in Scotland, a net balance of +29% of respondents reported that house prices were on the rise, compared to +37% the month previous. This was the second weakest figure since June 2020. And Scottish respondents on balance now expect prices to decline. The net balance for three-month expectations is -40% of respondents and a net balance of -41% of respondents was recorded regarding the 12-month outlook.
Across the whole of the UK, the market is continuing to ease with buyer demand, agreed sales and new instructions in negative territory.
Thomas Baird MRICS from Select Surveyors Ltd in Glasgow says: “There has been a definite slowdown in the residential market due to lower levels of mortgage products and high interest rates.”
Marion Currie AssocRICS of Galbraith in Dumfries & Galloway says: “November continued in much the same way as October in terms of buyer activity and interest, with perhaps only a small seasonal slowdown rather than any particular economic factors at play. Stock is diminishing however, with fewer new instructions compared to sales.”
Simon Rubinsohn, Chief Economist, commented: “The overall tone of the latest RICS Residential Survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance. However, anecdotal comments from respondents capture the very real significant divergences in market behaviour at a more localised level.
“Although the headline price balance recorded two consecutive modest monthly falls in prices, and the forward-looking series indicate that this trend will extend through the coming months, the likely ‘job-rich’ recession suggests the downturn in the housing market this time could be shallower compared with past experiences. Meanwhile, the imbalance in the rental market remains significant as landlord instructions continue to fall and is consistent with further increases in rents, even if the momentum does appear to be slowing just a little.”