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Increasing Confidence in Housing Prices Post-Brexit

Confidence has returned to the Scottish housing market following the Brexit vote.

Despite the doom and gloom predictions made by many before the UK's historic vote to leave the EU in June, the BBC report that a survey carried out by the Royal Institution of Chartered Surveyors (RICS) found 17% more surveyors in Scotland have reported an increase in house prices. That figure represents an 8% increase from figures in July when there was a drop in activity and price expectation across the UK immediately following the vote. A year-on-year rise in house prices was also reported by the Edinburgh Solicitors Property Centre (ESPC) which said the average selling price of homes in east central Scotland has gone up by 6.2% over the last three months. Despite this, the ESPC also reported an 8.1% drop in the number of homes being sold in the same period.

Limited Impact

Maria Both-Lopez, ESPC’s business analyst, said that a survey of their members showed the Brexit vote has had a limited impact. She also stated that the main reason buyers are not choosing to move home is due to a shortage of housing stock, rather than fears about the market.

Gail Hunter, director of RICS in Scotland, stated that, although uncertainty remains over the market post-Brexit, the Bank of England's decision to lower interest rates has been a considerable factor in boosting confidence in the housing sector. She also stated that the "welcome steps" taken by First Minister Nicola Sturgeon have also had an impact.

UK-Wide Rebound

When the housing markets took a dip immediately following the Brexit vote in June, it looked as if the bleak forecast made by many forecasters had come true. But a UK-wide survey carried out for the House Price Sentiment Index from Knight Frank and HIS Markit found that 18.4% of the 1,500 households surveyed said that their home had risen in value in the last month.

According to Gráinne Gilmore, head of UK residential research at Knight Frank, this represents a UK wide rebound in sentiment since the vote. “While households are still positive, they are expecting more modest growth in property prices over the next 12 months than they were in September,” Gilmore stated.

Tim Moore, senior economist at HIS Markit, pointed out that the data collected in the survey showed resilience across all UK regions, stating “The key message from October’s survey data is that UK housing market sentiment has recovered strongly this autumn from the post-referendum jitters seen during the summer.”

Prices on the rise

According to data from Your Move/Acadata House Price, two-thirds of local authorities in Scotland witnessed increases in house prices. The data shows that the average house price in Scotland has gone up by 2.4% since last year, with Inverclyde, Clackmannanshire, and North and South Ayrshire leading the way with increases of 5.7%, 5% and      4.4% respectively.

The biggest falls have been in Aberdeen City with an 8.8% drop over the year (unsurprising given the plummeting oil prices) and Dumfries & Galloway with a 6.1% drop.

Quick action

RICS Chief economist, Simon Rubinsohn, stated there were clear signs the housing market across the UK was calming somewhat following the Brexit vote. 

It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence."

Business as usual

This sentiment was echoed by Scott Peterkin, a partner at Burness Paull. He observed that the demand for new homes has remained healthy post-Brexit vote. Although he lists his sources as anecdotal accounts, they are backed up by the figures and statistics mentioned above. He observes that “whilst the fundamentals of the housing market remain unchanged – namely, an under supply of new homes and real demand from buyers who, generally, have no issue getting a mortgage (provided they have some equity), then there is no reason why our appetite for new homes should diminish.”

Don’t be discouraged

The bottom line of all these facts and figures is that the Brexit vote has had little to no impact on housing prices in the UK. This should be good news for those who were holding off on buying or selling a property after the Brexit vote in case of market turmoil. This stability in the UK market means that those buying and selling properties are in roughly the same position as they were before the Brexit vote took place.

If you are looking to make a move but are concerned about the impact Brexit has had on the housing market, this blog has hopefully put some of your fears to bed.

Contact McArthur Stanton Property Solicitors Scotland

Here at McArthur Stanton, we have been buying and selling homes for our delighted clients for generations, and will always act in your best interests. If you are looking for advice or assistance when buying or selling a property in Scotland, contact our expert property lawyers today.

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