NEW buyer enquiries in Scotland have fallen again, while the outlook for the nation’s housing market remains ‘challenging’.
Those findings are revealed in the latest RICS UK Residential Market Survey. Respondents also expressed concern about the impact of new Scottish Government initiatives on the supply of rental properties.
A net balance of -24% of Scottish respondents reported a fall in new buyer enquiries in September, down from -20% in August. This is the fifth month in a row in which buyer interest has dropped.
Sales are also down for the fifth month in succession, with sales expectations over the next three months also remaining negative. A net balance of -5% of Scottish respondents expect sales to fall in the three months ahead.
Surveyors are also less positive about house prices than they were previously. While prices have been ‘propped up’ by a lack of supply recently, RICS said the data is ‘notably less positive’ than before and continues the trend since May 2022 of an easing in house price growth.
In the lettings market, tenant demand continues to rise but at a slower rate, alongside a fall in landlord instructions.
Ian Morton MRICS, Bradburne & Co in St Andrews, said, “The Scottish Government introduced restrictions on rent increases and no evictions until March 2023. This may reduce the confidence of buy-to-let investors adding to their portfolios and in return not helping the severe shortage of rental stock.”
Euan Ryan, senior public affairs officer, RICS, added, “RICS welcomes the Scottish Government’s focus on ensuring tenants have access to secure, high quality, safe and affordable tenancies amid significant economic challenges. We are also strongly supportive of efforts to improve the maintenance and energy efficiency of properties.
“However, we are concerned over the low supply of rental properties, which can lead to increased costs and reduced choice. Care must be taken to ensure that the Government’s current initiatives do not exacerbate this issue and prevent necessary investment in the sector. The Government must also bolster its own role in the delivery of affordable homes for rent to ensure adequate supply.”
Commenting on the UK sales market as a whole, Simon Rubinsohn, chief economist at RICS, said, “The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty resulting from higher energy bills and the wider cost of living crisis, in shifting the dial in the housing market. Even though the headline price balance remains in positive territory for now, storm clouds are visible in the deterioration of near term expectations for both pricing and sales.
“Looking further out, the picture portrayed by the RICS survey has clearly shifted in a negative direction. How this plays out in terms of hard data will inevitably depend in part on the state of the mortgage market once it settles down, but it is difficult not to envisage further pressure on the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.
“For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows. However, as lenders have been a lot more cautious through this cycle with high loan to value mortgage accounting for a much smaller share of the lending book than in the past, this should help to limit the adverse impact on the market.”
