Property market highlights:
- Property sales and listings volumes show signs that they are returning to a pre-pandemic level
- Buyer demand still however outstripping available properties creating a very competitive market
- We discuss if the war in Ukraine has already or will have an impact on the Scottish property market
Property sales and listings volumes show signs that they are returning to a pre-pandemic level
Since the property market re-opened in July 2020, things have been incredibly busy across the board. The number of properties coming to market and sales numbers have hit recent record highs with many people moving home.
It does however appear that sales and listings volumes are beginning to return to pre-pandemic levels.
In their recent House Price Report, Edinburgh Solicitors Property Centre (ESPC) noted that comparing the recent quarter (December 2021 to February 2022) with the same period in the previous year property sales volumes were down 20.2%.
Registers of Scotland (ROS) reported a very similar trend in their most recent House Price Index. When comparing property sales in November 2021 to November 2020, there was a decrease of 20.1%. 9990 property sales were recorded in November 2020, whereas 9457 were recorded in November 2021.
Buyer demand still outstripping available properties, creating a very competitive market
Whilst property sales and listings appear to be returning to a pre-pandemic level, the same however cannot be said for buyer demand.
The best way to determine buyer demand is to review how quickly properties are selling and how much property prices are increasing. The more demand, the quicker properties sell and at higher prices.
Halifax reported in their February House Price Index that property prices across the UK grew 10.8% year on year, with Scotland just slightly behind the UK trend at 9.2%. To put this into context, since February 2020 (around the time the pandemic effect started to be felt in the UK) the average property price in the UK has risen by £38,709 from £239,414 to £278,123.
ROS reported that the City of Edinburgh is currently the most expensive part of Scotland in which to purchase a property, with an average selling price of £310,281, the cheapest being East Ayrshire at £122,405.
Properties have also been selling more quickly. ESPC noted that the median time to sell has reduced by 2 days from 20 to 18 comparing the most recent quarter to the same period last year across Edinburgh, the Lothians, Fife and the Borders. Some areas are showing an even quicker acceleration in selling time. For example, homes in West Lothian sold 12 days faster this quarter compared with the same period last year.
As you can see, demand still remains very strong across the property market, which can be excellent news for property sellers. It can however make things tricky and competitive for those looking to purchase a property.
Evidence suggests that this competitive buyers market is causing property sellers to hold-off putting their properties on the market until they are sure they will be able to make an onward property purchase. This then feeds into the overall loop of less properties being on the market, creating higher demand.
Will the war on Ukraine have an impact on the Scottish property market?
Alongside the rest of the nation, we have been shocked and upset watching the war unfold in Ukraine in recent weeks. Compared to the scale of human tragedy in Ukraine, it is difficult to contemplate looking closer to home at how this conflict may affect our own economy and, in turn, property prices. It is, nevertheless, a concern that we have heard from our clients so it seems only right that we address these concerns.
We haven’t experienced any impact on demand or interest from people looking to move home, however it is likely that the impact may be felt from a broader perspective in the coming months.
This is more likely going to be related to the ongoing acceleration of inflation and the cost of living. Many experts have predicted that this will only continue to get worse, with the war in Ukraine contributing to the acceleration.
As the cost of living increases, wages remain the same and property prices surge. This has the potential to price many people out of the market, with those most affected likely to be first time buyers. With demand already so high, and multiple buyers bidding for most properties, this is unlikely to result in properties failing to sell. However, any decrease in buyer competition is likely to take some of the sting out of the rapid increase in property prices that we have seen since the relaxation of pandemic lockdown rules when many people found themselves with additional money in their pockets due to the reduction in their ability to spend during lockdown
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