THE HOUSING market in Scotland remains subdued, with sales, instructions and prices all in decline, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey. However, the rate at which sales and prices are falling has eased in the past month, and surveyors are more upbeat about both the short-term and longer-term outlook than they were previously.
A net balance of -5% of respondents to the latest survey in Scotland said that house prices fell over the past three months. Although this remains in negative territory, it is an improvement compared to -18% in September and -17% in August. Scotland’s price balance also continues to be in a much stronger position than the overall UK figure of -63%.
Looking at demand, a net balance of -20% of Scottish respondents reported that new buyer enquiries fell in October, compared to -35% the month previous. The newly agreed sales indicator was also less negative at -27% compared to -60% in the September survey.
This appears to be having an impact on surveyors’ outlook, with a net balance of -8% of respondents in Scotland anticipating prices to fall over the next three months, a marked improvement from -27% in September and -37% in August.
Indeed, respondents in Scotland now expect sales to increase over the next three months for the first time since April 2022. A net balance of 31% of respondents anticipate sales to rise compared to -10% in September.
On a 12-month horizon, a net balance of +17% of Scottish respondents expects prices to be higher in a year’s time, and +4% expects sales activity to be higher.
Regarding the Scottish lettings market, the imbalance between demand and supply continues. A net balance of 17% of surveyors reported that there was a rise in tenant demand, whilst respondents noted a continuing sharp fall in new lettings coming onto the market. The lack of supply for the high levels of demand is continuing to drive prices up with a net balance of 46% of surveyors in Scotland anticipating rents to increase over the next three months.
Commenting on the sales market, Greg Davidson MRICS of Graham & Sibbald in Perth said: “Market conditions seem reasonably stable but some hesitancy remains. The squeeze on affordability has been affecting some markets but now that the base rate looks to have stabilised and inflationary pressures have improved it is anticipated that this will benefit the market.”
Alan Kennedy MRICS of Shepherd Chartered Surveyors in Fraserburgh said: “The local market is fairly sluggish at present, partly due to seasonal effects and partly due to interest rates and cost of living effects. Realistically priced properties are selling at or close to home report value, though typically taking longer to sell than before.”
Regarding the lettings market, Craig Henderson MRICS of Graham & Sibbald in Ayrshire said: “Landlords continue to exit the market due to government restrictions on rent increases in Scotland, and this in my opinion will result in rising rents in the private sector as available rental properties are superseded by tenant demand for any available properties.”
Commenting on the UK picture, RICS Senior Economist, Tarrant Parsons, commented: “Plenty of caution remains evident with respect to both buyer and seller activity across the UK housing market, albeit the latest survey feedback points to a slightly less negative picture than that reported over the previous few months.
“Although base interest rates have now been kept on hold at each of the past two MPC meetings, the Bank of England was keen to emphasise that monetary policy is set to stay at a restrictive setting for quite some time yet. As such, mortgage affordability will remain stretched over the near-term, leaving little prospect of a strong rebound in residential sales volumes, even if expectations have now moved away from cyclical lows.”