The Scottish housing market is expected to slow down over the coming months as the uncertainty created by the European Union referendum undermines confidence among buyers and sellers.
Activity levels so far remain buoyant, with few reports of transactions falling through and some estate and solicitors suggesting that Scotland could even benefit from the outcome.
Economists warn that the housing market across the UK is at risk of a serious downturn following the EU referendum, however.
Howard Archer, chief European and UK economist at IHS Global Insight, has predicted that house prices will fall by 5 per cent over the second half of 2016 and by another 5 to 7 per cent next year.
There is little doubt that the uncertainty will be felt in Scotland over the coming months, and the Edinburgh Solicitors Property Centre (ESPC) has already reported a post-referendum dip in the number of people putting their homes up for sale.
Maria Botha-Lopez, business analyst at ESPC, said: “In the weeks and months leading up to the referendum, there didn’t seem to be any clear effect of the campaign on the housing market, which was adjusting to the new land and buildings transaction tax (LBTT) supplemental tax.
“However, with the unexpected outcome [of the vote], there was a dip in new properties for sale and home report requests the week after Brexit, but this appears to have been a temporary reaction as the number of new listings is beginning to build up again.”
While reports of people pulling out of transactions have been rare, according to Botha-Lopez, that may not be an accurate reflection of sentiment. She added: “It is still too soon to tell what the housing market in the post-Brexit landscape will look like, with immediate effects seeming to be a ‘wait and see’ or ‘wait for the dust to settle before proceeding’ for those who were not already in the middle of a property transaction.”
Austin Lafferty, director of Glasgow Solicitors Property Centre, is similarly circumspect.
He said: “It is inevitable that any political change – especially when it brings uncertainty – will have an effect on the property market. This is not just around a reduction in price levels; the fear of the unknown with regards to employment or personal finances can make potential sellers hesitate.”
The GSPC hasn’t seen any fall in website visitors since the referendum, with would-be buyers continuing to view properties on the site.
“However, the full ramifications of Brexit have yet to be felt and uncertainty in the market is never welcome,” said Lafferty.
Others believe confidence in Scotland’s housing market is sufficiently robust to endure a period of volatility.
Robert Carroll, managing director MOV8 Real Estate, said buyer demand had remained unchanged since the referendum. And while Scotland would clearly be hit if the UK economy suffers a serious slowdown, he believes the long-term picture remains positive.
“With Scotland’s economy and employment market being less reliant on wealth created in the City of London, we would anticipate that, after a period of reflection, confidence in Scotland’s housing market amongst property buyers will not be negatively affected.”
The market north of the Border is still relatively insular, said Carroll, with most buyers moving just a few miles from their previous location.
“Barring wider, surprise economic consequences, any reluctance of EU nationals to purchase property in Scotland should have a relatively small effect across the vast majority of property sellers, with the exception perhaps of the highest end of the market which accounts for only a small percentage of the number of properties that are sold every year in Scotland.”
But there may be increased interest from buyers south of the Border, judging by inquiries one firm has taken over the past three weeks.
The number of calls to Rettie & Co about moving to Scotland increased sharply in the week after the referendum, it said, while sales figures were up 49 per cent on the same week in 2015.
“Far from withdrawing because of any perceived uncertainty, there was a determination amongst buyers to press ahead with transactions,” said a spokesperson for the firm.
“Political matters aside, the big attractions for buyers moving to Scotland remain the quality of life, the amount of property you can get for your money, cultural and sporting heritage, education and employment opportunities.”