HOUSE prices in Scotland continued to fall according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey with the price balance now at its lowest outside of lockdowns in over 10 years.
House prices remained in negative territory for the second consecutive month the survey suggests with a net balance of -17% of respondents in Scotland stating that house prices fell over the past three months, compared to -8% in July. The last time it was lower was in the April to June period of 2020 when coronavirus restrictions were in place. Outside of that, the price balance is at its lowest since January 2013.
In saying that, Scotland though continues to be in a stronger position than most other UK regions. The overall UK price balance sits at -68%, 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 has deteriorated further. A net balance of -39% of respondents in Scotland expect prices to decline over the next three months, which is the most negative that this figure has been since May 2020 when the market was impacted by coronavirus restrictions.
Looking at demand, a net balance of -30% of Scottish respondents in the August survey reported that new buyer enquiries fell. This is compared to -57% the month previous.
Regarding supply, a net balance of -31% of Scottish respondents reported a fall in new properties coming onto the market throughout August,
The limited supply and demand are unsurprisingly impacting on sales with a net balance of -56% of surveyors in Scotland reporting a decline in sales in the most recent survey.
Marion Currie AssocRICS, RICS Registered Valuer for Galbraith in Dumfries & Galloway said: “Buyer caution continues, with deals taking longer to achieve. That said, there are still a good many cash buyers active in the market, and sensibly priced properties will attract their interest.”
Craig Henderson MRICS, of Graham & Sibbald Llp in Ayrshire commented: “The market continues pretty much as it has all this year, with demand still outstripping supply, but buyers are more cautious about paying any more than a price at or around the home report value. Overall still positive despite the ongoing inflation and interest rate pressures.”
Thomas Baird MRICS of Select Surveyors in Glasgow said: “Despite a relatively slow summer market we are starting to see home report instructions increase as we enter the autumn season.”
Commenting on the UK picture RICS Chief Economist, Simon Rubinsohn, said: “The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect.
“Buyer enquiries remain under pressure against a backdrop of economic uncertainty and the high cost of mortgage finance. Meanwhile, prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period. Critically, affordability metrics still remain stretched in many parts of the country.
“The other side of the softer demand in the sales market is the continuing strength of rental demand. The yawning gap with rental supply is clearly visible in the RICS Rent Expectations indicator which remains close to an all-time high.
“Anecdotal comments from contributors that landlords are leaving the sector suggests the challenging environment for tenants is unlikely to improve any time soon”.
