The Scottish property market almost came to a standstill over the lockdown period. We saw transaction levels drop to little over 10% of what we had anticipated, and our pipeline almost dried up due to the Registers of Scotland closing for business whilst they worked on a digital solution. It has been a pretty grim place for the property world, like most industries. The encouraging point for sellers is that we haven’t seen prices falling, as sales values have stayed high.
At the tail end of last year, we saw Brexit disrupting the market. Vendors held off whilst they waited for clarity on the UK’s future, and once we had clarity, the property market went crazy. Dubbed the ‘Boris Bounce’, there was pent-up demand as people looked to move and transaction levels and prices were booming. The wider economy was showing signs of recovering and banks were lending at fortuitous rates: up to 95% loan-to-value – a sign of market confidence.
Guessing what the future of the property market might be like is very difficult. We don’t know how the wider economy will recover, how many jobs may be made redundant or if there will be a second wave of COVID-19 infections.
However, what we can do is look at trends from other markets who have come out of lockdown. Every major city which has come out of lockdown has seen a decent spike in activity, with some even returning to 87% of pre-COVID transaction levels. Rightmove UK reported their highest day of traffic on May 27th this year and, overall, their website traffic was up 18% on May 2019. Agents in England have also reported people knocking on their office doors to put their property on the market as soon as possible.
The demand is made up of several factors: there is still remaining pent-up demand from Brexit, banks are lending with mortgage rates at an all-time low, and people are changing their lifestyle, as commutes will become a thing of the past for many office workers. We are seeing a growing demand for out of town properties, as open space becomes more important than ever and people get more space for their money.
We have not seen any reduction in prices to date, which is encouraging. After discussions with several surveying firms in Edinburgh, they confirmed that they have not seen any evidence that values have dropped, so will be using pre-COVID sales data as the basis of their valuations for Home Reports.
Banks are lending at all-time record low interest rates. There are mortgage products at 95% loan-to-value, which is especially helpful for first time buyers. Lenders are also taking into account the reduced income of furloughed employees, assuming that it will go back up once workers return. For many, lending is as available and affordable as it has ever been.
Assuming we can reopen the property market after Phase 2 (18th June) of the Scottish Government’s roadmap, all signs point to an initial bounce, and we are forecasting this will happen. We are already beginning to see green shoots. Property prices in Edinburgh and the Lothians should stay high as demand outstrips supply. How long this bounce will last is unknown, but we would suggest that if you are thinking of moving, get in early and take advantage of a seller’s market and low interest rates.
As we anticipate the beginning of market bounce-back, why not begin preparing for your next move? For more information about our current digital services or to learn more about our properties, get in touch. Email us at firstname.lastname@example.org or call us at 0131 603 7333 for information and trusted market advice.