What Next for House Prices?
According to recent reports, the property market looks set to slow down in the latter half of this year. The market over the last two months has been frenzied, with rising house prices underpinned by a lack of supply and increased demand.
Recently, Zoopla predicted that there would be a 2.5% increase in property prices this year here in Scotland – with a UK-wide increase of 5%. There will, of course, be some variations on this depending on catchment areas, commutable distance to cities and property type so in central locations such as Edinburgh and Glasgow this figure is likely to be much higher. Especially as you consider that between January and December 2021, Scottish average property prices increased by almost 9.5% (Lomond Group) and this was led by gains in Edinburgh which saw prices increase at 10.6%. Aberdeen was the lowest at just 2.2% and Glasgow increased by 8.3%.
The most in demand property types were detached and semi-detached homes which were all within double digit growth, rising on average by £27,318. The highest rises were seen in detached homes across Scotland which went up by an average of 15.4% or, in real terms, £44,182 compared to the same period in 2020. Edinburgh topped the market with an 18.3% rise in the price of detached homes which equates to £110,181. The second highest increase for this type of property was in Glasgow which had an average rise of 17.8% or £67,067.
Flats had the lowest growth with an increase of just over 4% in Scotland, however, Edinburgh still saw this type of property rise of 7.8%.
Rising inflation and recent interest rate rises will also impact the property market. Consumers will be less well off and will be required to be more cautious when borrowing. Saving for a new home against a backdrop of rising interest rates and even higher property prices could impact people’s ability to buy a home.
The market looks set to stay buoyant for the rest of this year as many factors won’t be changing any time soon. This includes high buyer demand, lack of supply, affordable mortgage deals, a continuation of hybrid working and the desire for larger homes with gardens or balconies. These all add up to create a competitive and healthy property market for buyers and sellers.
Edinburgh’s continuing popularity shows no signs of slowing and the increase in average pricing for detached houses has been unprecedented. An increase of £110,000 on average for detached properties in just one year is an exceptional rise and demonstrates the buoyancy of the market. Glasgow has also had a remarkable year and Edinburgh and Glasgow have both seen a near 20% rise in average property prices for detached homes.
It’s not widely believed that there will be any sudden fall in property prices as the demand is still not being met by current supply levels but rises like we have seen over the last year aren’t sustainable long-term. substantial increases of this scale are sustainable in the medium to long term.
According to Landmark Information Group’s latest data, the Scottish housing market is bouncing back to 2019 levels and the Q1 Property Trends Report Scotland paints a positive picture for home-movers going forward.
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