HOUSE prices in Scotland have continued to fall, with new research finding the price balance is now at its lowest outside of lockdowns in over 10 years.
The findings were revealed in the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.
House prices remained in negative territory for the second consecutive month with a net balance of -17% of respondents in Scotland stating prices fell over the past three months, compared to -8% in July. The last time it was lower was in the April to June period of 2020 when pandemic restrictions were in place. Outside of that, the price balance is at its lowest since January 2013.
However, Scotland remains in a stronger position than most other UK regions. The overall UK price balance sits at -68%, and all regions of the UK had more negative balances than Scotland, except for Northern Ireland.
Surveyors’ outlook for the market in Scotland in the short-term has deteriorated further. A net balance of -39% of respondents expect prices to decline over the next three months, which is the most negative that this figure has been since May 2020 at the height of the pandemic.
A net balance of -30% of Scottish respondents in the August survey also reported that new buyer enquiries fell. This is compared to -57% the previous month. A net balance of -31% of respondents reported a fall in new properties coming onto the market throughout August.
The limited supply and demand are impacting on sales with a net balance of -56% of surveyors in Scotland reporting a decline in sales.
Marion Currie AssocRICS, RICS registered valuer for Galbraith in Dumfries & Galloway, said, “Buyer caution continues, with deals taking longer to achieve. That said, there are still a good many cash buyers active in the market, and sensibly priced properties will attract their interest.”
Craig Henderson MRICS, of Graham & Sibbald Llp in Ayrshire, commented, “The market continues pretty much as it has all this year, with demand still outstripping supply, but buyers are more cautious about paying any more than a price at or around the home report value. Overall still positive despite the ongoing inflation and interest rate pressures.”
Thomas Baird MRICS of Select Surveyors in Glasgow added, “Despite a relatively slow summer market we are starting to see home report instructions increase as we enter the autumn season.”
Commenting on the UK picture, RICS chief economist Simon Rubinsohn said, “The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect. Buyer enquiries remain under pressure against a backdrop of economic uncertainty and the high cost of mortgage finance.
“Meanwhile, prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period. Critically, affordability metrics still remain stretched in many parts of the country.
“The other side of the softer demand in the sales market is the continuing strength of rental demand. The yawning gap with rental supply is clearly visible in the RICS Rent Expectations indicator which remains close to an all-time high.
“Anecdotal comments from contributors that landlords are leaving the sector suggests the challenging environment for tenants is unlikely to improve any time soon.”
