by Graham Forbes, partner in the Inverness office of DM Hall Chartered Surveyors.
WHAT a year. Even among grizzled property market professionals who have campaigned through recessions, slumps and banking crises, few have experienced anything like the dramatic peaks and troughs of the Covid Year.
Now that the tide of battle appears to be turning in our favour, and the whiff of victory is in the air, it is perhaps time to take stock and consider what the altered landscape of the future will look like as the smoke clears.
At first glance, it appears that Inverness and the Highlands – that is, stretching as far north as Caithness and as far west as Oban – have come through not only unscathed but in relatively good shape.
In fact, Inverness was one the best-performing cities in Scotland in the 12 months to October last year, according to Bank of Scotland, with the average house price rising by £15,000, or 8.1%, to £195,000. This contrasts starkly with north-east neighbour Aberdeen, where prices fell by 1.4%.
There is little doubt that the very satisfying growth in the Highland area has been driven by outside money. Despite rising prices, the region is still remarkably cheap compared to other parts of the UK and people with oodles of buying power have been circling since March last year.
This inflow has been brought to the boil by sustained local demand and a continuing shortage of quality properties, leading to an environment in which sales are going to very quick closing dates and conclusions, with noticeable price inflation.
Developments by local housebuilders such as Tulloch Homes and Springfield Properties are oversubscribed by many multiples, and executives of both firms have been calling on local authorities to work closely with them to address the north of Scotland housing shortage.
But, for a number of reasons, the market is at a significant disconnect from the local economy. The city centre is a ghost town, the cruise ships have stopped calling and the doors of hotels and restaurants – which should be rammed with tourists – remain firmly shuttered.
The worry is that, while the outlook for property looks rosy at the moment, hostilities could recommence as the year wears on and the people who have been furloughed become redundant, depressing the pool of aspirational buyers.
The closure of three storeys of Debenhams, the keystone tenant in the Eastgate Centre, has, as in other towns across the UK, been a major employment blow and chill winds are blowing through the rest of the retail sector. The city has also lost Laura Ashley.
These things matter. Tourism and retail attract visitors to the city: they spend their money, create local wealth and allow local people to participate in the property market. Without them, the outlook is cloudy.
Of course, many workers in retail have transferrable skills and could find employment in hospitality and leisure, but for that to happen we need the economy to reopen and to have the assurance that it is not going to be closed down again at the drop of a hat.
The Highlands experienced just this scenario at the time of the Boxing Day shutdown last year. One minute we were in Level One, meaning that we could go out for a meal with friends on a Saturday night, and the next we were plunged into Level Four, sharing the draconian restrictions of the Central Belt.
Like every other aspect of business, the property sector needs some degree of certainty, some measure of stability, to allow it to plan for the future and not be subject to arbitrary shocks which pull the rug from under it.
The market is buoyant at the moment, but prudence and caution are faithful allies in uncertain times and we have to remain aware of the bigger picture, conscious that forces outwith the immediate area which could have a dramatic effect.
The upside is that, for all this year of turbulence, the scenery has not changed. People want homes here because it is a lovely place to live. That is what will see us through.