Surveyors in Scotland optimistic for house sales despite fall off in new buyer demand

11/07/2024

HOME sales in Scotland are expected to rise over the next three months despite a falloff in new buyer enquiries during June, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.

A net balance of 26% of respondents to the survey in Scotland expect the number of sales to rise through Q3 2024, up from the 22% seen in May, and 8% in April.

Surveyors also remain upbeat about prices, with a net balance of 18% of respondents anticipating that prices will rise over the next three months. This follows a positive past three months, when the headline price balance remained at +29%.

Demand, however, is reported to have fallen through June. A net balance of -26% of surveyors reported that new buyer enquiries decreased in the most recent survey after a period of five months when this balance was in positive territory.

Surveyors in Scotland also note that supply was lower last month, with a net balance of -32% of respondents reporting a decrease in new instructions to sell, the lowest this balance has been in just under a year.

With supply and demand both subdued, it is unsurprising that a net balance of -15% of surveyors in Scotland reported a fall in sales, down from 4% in May.

Anecdotally, respondents pointed to factors including the General Election, the Euros and the Bank of England holding interest rates as factors in slower enquiries and newly agreed sales over the past month.

On the lettings front, the imbalance between supply and demand continues to drive rents up, however at a less severe rate than reported in May. A net balance of 33% of surveyors in Scotland reported a rise in demand (down from 57%), and a net balance of -17% of respondents noted a fall in landlord instructions (down from falling flat in May). Scottish surveyors still anticipate rents will rise (a net balance of 50%) however at a slower rate than seen previously, when the balance in the survey previous was 86%.

Commenting on the sales market, Marion Currie, AssocRICS, RICS Registered Valuer at Galbraith in Dumfries & Galloway, said: “A positive start to the summer season, with properties at sensible prices leading to successful sales.”

Adrian Stott, FRICS of J and E Shepherd in Lothians, added: “Supply is now more in balance with demand. We are also no longer seeing big differences between home report value and sales price.”

Discussing the rental market, Carolyn Davies, MRICS of Savills in Dumfries commented: “There is a continued lack of supply to the market with rents rising as a result. More tenants are now querying rent reviews as a result of the removal of the rent cap and increases larger to try and reduce the differential between existing tenancies and new tenancies.”

Commenting on the UK picture, Tarrant Parsons, RICS Senior Economist, said: “Although activity across the housing market remained subdued last month, forward looking aspects of the results did improve slightly.

“There are a couple of factors emerging that could support a gentle recovery in the months ahead. Perhaps most importantly, swap rates have eased in recent days, and this should allow banks to reduce mortgage rates, albeit modestly for now.

“If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy from next month, this may prompt a further softening in lending rates. Also, the recent election delivered a clear outcome, with housing seemingly pushed up the political agenda. As such, this could act to restore some confidence in the market moving forward”.

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