We’ve successfully piloted our clients through turbulent economic conditions in the past and this time should be no different.
Scottish property buyers on all rungs of the ladder have benefited from a sustained very low-interest rate environment. And one of the consequences of cheap borrowing coupled with a general shortage of supply has been a disproportionate escalation of property values. It has been a challenging environment for homebuyers with properties selling upwards of 15% over the home report value on a regular basis.
Recent events might offer a better environment for the homebuyer in what would be considered a correcting of the market. It may reduce some of the purchasers who have recently been looking to buy a property due to uncertainty around interest rates. At the same time, other buyers who have been waiting for the market to cool-down will be encouraged to come forward.
The last few years in the Scottish property market, it has been frustrating for many homebuyers as there has been much competition, this may well change though with homebuyers readjusting their budgets according to the interest rates available. Offering the homebuyer more opportunities with less competition, not requiring to bid so highly and borrowing less on their mortgage as a result.
For homebuyers thinking of renting, rents remain high, despite government incentives and weighing up options may prove buying is still the most attractive option.
What effect will recent events have on property prices or the likelihood of securing a buyer for your property?
We have had 5% annual growth per year in Edinburgh over the last few years. If prices are affected slightly, we have had incredible growth recently to balance this. This balance will not affect those who have purchased in the last 6 months.
Selling in this market will require a clear view of what the buyers are raising by way of mortgages and a realistic appraisal of property values. We are currently still seeing good interest in properties that we are listing with several having gone to closing dates in the last few days and with mortgage products returning to the market it may not be quite as doom and gloom as is reported.
We have seen huge demand for property in the last few of years, particularly following the end of the first Covid-19 lockdown. This has driven prices upwards but you can still get a good price without large numbers of viewers. Edinburgh still has a shortage of good quality property stock and due to being such a desirable place to live it has historically remained resilient compared to the rest of the UK.
Family homes remain in very short supply and this sector is likely to remain competitive. First time buyers who have been saving-up towards a deposit may require a larger deposit for a mortgage. There may be a drop in demand for 1st time properties. However, we have had such increases over the last few years, most sellers will still be ahead.
Recent increase in mortgage interest rates may potentially cause a level of calm to return to an Edinburgh property market that has been overheated for the past few years. Supply of properties coming to the second-hand market has been restricted in recent years. This, combined with various government incentives and historically low borrowing costs, have caused a boom in prices in recent years. However, it has also come at the cost of property buyers being able to move up the ladder and to secure their dream home.
All markets offer opportunities and also present challenges. We have had an Edinburgh property market over the last few years which has been overheated and low interest rates feeding through to inflated prices. A more balanced market with more supply and a little less demand is probably better for us all in the longer term.
In a changing market there are always opportunities and we can help take advantage of these. If you are looking for guidance on either a sale or purchase we are here to help, please us a call on 0131 337 1800.
Jame Sole, Property Manager