Expectations in the Scottish housing market have reached their highest level in two and a half years, according to the latest findings from the Royal Institution of Chartered Surveyors (RICS) Residential Market Survey. Despite subdued activity in September, there is growing optimism for the remainder of the year.
A net balance of 33% of surveyors in Scotland anticipate house prices will rise over the next three months, marking the highest level since February 2022 and a significant increase from 15% in August. Similarly, a net balance of 32% expect sales to rise during the same period. Over the past three months, a net balance of 40% of respondents reported an increase in prices, which is notably higher than the UK average of 11%.
However, supply remains a significant challenge. New instructions to sell fell for the second consecutive month in September, and new buyer enquiries also decreased, albeit at a slower rate than in August. This limited demand and supply have resulted in broadly flat sales at the end of the third quarter.
In the rental market, an imbalance persists with a net balance of 20% noting increased demand, while a staggering -80% reported a fall in supply. Consequently, a net balance of 40% anticipate rents will rise through the fourth quarter.
Commenting on these trends, Grant Robertson, director at Allied Surveyors in Glasgow, noted: “The market has been slow to pick up after the summer, primarily due to the lack of rate reduction by the Bank of England. The mixed sentiment over future changes is holding everything back.” Craig Henderson from Graham & Sibbald in Ayrshire added: “September has been a busy month, with instructions of home reports higher than the same month last year. This may be as buyers are seeking to market and sell before the festive period – demand is still there, but buyers continue to be price sensitive.”
In terms of rental dynamics, Carolyn Davies from Savills in Dumfries highlighted: “The continued lack of supply and landlords questioning at the end of tenancy whether to stay in the private rented sector or sell.”
Tarrant Parsons, RICS’ head of market analytics, emphasized: “The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand. Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward.” He added that forward-looking sentiment data suggests sales volumes will gain momentum both in the near-term and over the next twelve months.
