The Scottish new-build residential market is preparing for takeoff, according to new research from the property consultancy Jones Lang LaSalle, but optimism among housebuilders is tempered by concerns over the potential impact of independence.
The report on Scotland’s residential development market is based on interviews with 12 private housebuilders, responsible for over 80% of the country’s housebuilding.
Although the signs are positive for an escalation in development, builders are less confident about prices, which they expect to rise by just 1 or 2% over the next three years.
With the referendum less than year away, most housebuilders believe that Scottish independence would result in less housing development in Scotland.
But while there has been little change in house prices in recent years, transaction levels are up, although they are still around half the volumes seen in 2007/08.
The recent increase in turnover has been at least partly due to government initiatives. For example, 23 homebuilders and three lenders in Scotland have signed up to MI New Homes, allowing lenders to offer up to 95% mortgages on new homes up to £250,000 sold by participating builders. Deputy First Minister Nicola Sturgeon has also announced a £120m fund for a shared-equity scheme in Scotland.
Jason Hogg, director of Jones Lang LaSalle’s residential team in Scotland, said: “Housebuilders are enthusiastic about prospects over the next few years despite limited anticipation of price growth. Many intend to step up development activity as economic fundamentals and housing market conditions improve.
“The concerns raised about independence perhaps highlight a fear of the unknown rather than an outright objection to the principle, at a time when we are finally seeing a return to growth.”