Scottish housing market ‘extremely buoyant’ but gradual slowdown looks likely

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NEW research has revealed that Scottish house prices are still rising despite the cost of living crisis.

The April RICS Residential Market Survey, however, did find that some forward looking indicators ‘softened slightly’.

A net balance of +65% of Scottish respondents to the survey said house prices rose. New buyer enquiries and newly agreed sales were also up with net balances of +6% and +4% respectively.

Scottish surveyors expect prices and sales activity to continue rising in the short-term. A net balance of +27% now expects prices to increase over the next three months compared to a net balance of +38% the previous month. And a net balance of +8 expects sales to increase compared to +16% previously.

One of the main trends is a lack of homes coming onto the market. The net balance for new instructions to sell was -5% – the ninth month in succession that the figure was negative.

David Cruickshank MRICS of DM Hall in Elgin said, “The market is still extremely buoyant, despite rising prices of goods and energy. This is driven locally by pent-up demand and insufficient supply. A gradual slowdown is likely over the next year as the increased cost of living finally affects the residential market.”

John Brown FRICS of John Brown and Company in Edinburgh, added, “There is buoyancy in the market, but the impact of interest rate rises, and uncertainty generally is coming into buyers’ thinking. Sellers are still thin on the ground as moving costs and risk makes staying put an option.”

RICS economist Tarrant Parsons commented, “Despite growing macro headwinds in the form of cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer enquiries. For the time being at least, even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices.

“As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming twelve months have only moderated slightly from recent highs.”