Is Scottish Independence Referendum Affecting House Prices?

I was catching-up on property news headlines this morning and came across an article in The Telegraph stating that the upcoming referendum vote was having a negative impact on the Scottish property market. Not only that, it was apparently causing a change in solicitor practice with regards to how they submit offers, with offers now being made ‘subject to a No Vote’. I have steered completely clear of voicing any opinion on the referendum and Scottish Independence because it is a sure-fire way to get trolled, insulted and generally lend the comments section of your website to a heated and, not always pleasant, debate between two very opposite sets of opinions. However, this article did rather tip me over the edge and I have to respond.

First, a Couple of Disclaimers…

One…I am not making a statement one way or the other, either in favour of or against, Scottish Independence. Everyone in Scotland has the right to read the information available, watch the debates, consult with their heart and their head and then make their own decision on this matter.

Two…a cursory glance at the Comments section of any property-related article on the websites of The Guardian, the BBC, or most non-London orientated news outlets shows that there are a lot of people who feel that the property market has too big an influence on the wider economy and that there are those who feel that house prices are too high and that they have become unaffordable relative to average earnings. I have a lot of sympathy for those arguments and I do always try to stick to facts and not talk-up, or talk-down, the market unnecessarily. However, these are arguments that are separate from the question of whether the referendum is having an effect on the property market and I would prefer, therefore, to put those issues aside for just now.

However, I do feel that it is irresponsible to scare-monger or to attempt to grab headlines simply by jumping on a media bandwagon when the effect of that wagon-jumping is to talk-down, and potentially negatively impact, something as important to the general economy as the stability of the property market. This has an impact on every single person in Scotland, even if they don’t own a property, because of the key importance of the property market to the wider economy.

The article in question, stating that the housing market is suffering because of the upcoming Referendum, is here: Whilst it’s not entirely surprising that The Telegraph would run a piece that is relatively one-sided, there is absolutely no balancing opinion on their account of what is happening.

By contrast, The Scotsman ran a very similar piece and covered both sides of the argument: The balancing comment in that case included comment from me. And, of course, that comment is wonderful in every way and absolutely correct! However, I would like to expand on that balancing comment that I provided, here, in this piece.

In short, the upcoming referendum is having nothing like the effect that some commentators would have you believe. I will say, for the last time now, that this is all politically-neutral: I am not stating a preference one way or the other – I am, however, stating what I am actually seeing happening ‘on the ground’ in what is one of the largest estate agency firms in Scotland.

We were genuinely concerned a few months ago that the upcoming referendum would have an effect on the property market. Thankfully those fears seem to have been misplaced.

The run up to the referendum has coincided with historically low interest rates, increasing availability of mortgage finance for buyers and an increase in property prices. It seems that this increased confidence in the market has overwhelmed any misgivings that most buyers may have had about the effect of the referendum outcome on the Scottish property market.

It is of course true that many sellers and buyers have asked us what effect we believe that the outcome of the referendum will have on the market. That has been a recurring conversation for the past year or so, no less when speaking to clients than at dinner parties, and is to be expected when such a momentous decision is being made in the near future.

However, instead of spouting my own opinions, we can instead just look at the numbers. The number of sales and purchases that we acted in during the past month (August 2014) is not only in line with what we would have expected but is in fact way higher than what we would ever have hoped for in August. August is a month when the school holidays can slow things down a bit and it’s usually not quite as busy as Spring. However, in August we acted for a record number of buyers and sold more properties than we have sold in any other month of 2014. If the referendum is having a negative effect on the market, it certainly doesn’t seem to be affecting our buyers and sellers. And I honestly don’t believe that it can only be happening within our offices.

I’m also quite surprised to hear that any lawyers would be inserting referendum-related clauses in property offers. As far as I am aware, of the several hundred offers that we have received on behalf of clients in the past three months, not a single one has contained any such clause.

Not only that, it all seems rather unnecessary anyway: the reality is that almost all offers in Scotland are made with a clause that places the offer as ‘subject to finance’ in some way (whether that’s ‘subject to the lender accepting the Home Report’, ‘subject to the buyer obtaining a satisfactory survey’, or something else along those lines). Here isn’t the place to get into a debate about whether the system of submitting offers and buyers being able to pull-out of that offer is perfect. However, what this all means in practice is, whatever the reason might in fact be, potential buyers are at liberty to pull-out of the purchase for quite some time after the offer has been made and certainly until the missives, or legal contract, have been concluded.

With the referendum less than two weeks away, it seems rather unnecessary to be inserting a clause that makes the purchase subject to the outcome of the referendum. It may well be that the buyer insisted on that clause being inserted or that it was simply an ‘in joke’ from one lawyer to another but, either way, it strikes me as slightly unnecessary that offers have apparently been containing ‘subject to a No Vote’ clauses.

In short, it really does appear to be business as usual. I am sure that, whatever the vote, at least we will all have certainty. Anyone who might have been hanging-on to see what the outcome of the vote was before buying or selling will at least be able to move on with their lives. But I do feel that these people are the vast minority. In general, things have been ticking-along quite alright in the past few weeks and, quite honestly, the impact of the referendum has been negligible based on the numbers that we have been seeing, not just in our own offices, but also in the general market.

Now it’s just time to see what the result of the vote is on 18 September.


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