According to the latest RICS UK Residential Market Survey, activity in the Scottish housing market slowed during May, as a decline in new properties coming on to the market was accompanied by a drop in new buyer enquiries.
A net balance of 13% more chartered surveyors reported a fall in demand while a net balance of 8% saw sales tail off last month.
Despite softer activity, house prices in Scotland remained firm and a net balance of 15% more respondents expect prices to climb in the next few months. This is due, in part, the continued decline in supply, with 22% (net balance) of surveyors reporting a decrease in new properties coming on the market in May.
Supply has now failed to keep up with demand, even during more quiet months, for much of the past 3 years.
While prices are continuing to rise modestly across the rest of the UK, this trend looks set to fade, with 10% more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012.
London and East Anglia are expected to be worst hit with 43% (net balance) and 33% (net balance) of respondents saying that prices will fall over the next quarter.
Across the UK it appears that we are looking at a short term drop in house prices caused by the uncertainty resulting from the forthcoming EU Referendum, coupled by a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties. In Scotland, prices looks set to remain firm, despite a dip in activity, as demand continues to outpace supply.
We urge the new Scottish Government to make the delivery of housing, across all tenures, a priority during their term. From new supply, to improving the poor condition of the country’s existing housing stock and developing plans to bring back into use Scotland’s 27,000 long-term empty properties, more needs to be done to address the current imbalance.