Scottish housing market is surviving despite uncertainty - John Kelly
Although the overall level of confidence in the economy remains fragile, the news is not all doom and gloom. Even with the political and economic uncertainty we have lived through over the last year, house prices in Scotland continued to grow by 1.3 per cent.
The industry body for home building, Homes for Scotland, has highlighted that despite home building numbers eventually falling back to pre-recession levels, there is still a massive shortage of homes. Recent research by Fraser of Allander on behalf of Homes for Scotland showed that house price growth is far from being evenly spread across the country, with Edinburgh and the East showing particularly high growth. In the West of Scotland, areas like Renfrewshire and East Dunbartonshire, where school performance is strong, also showed higher house price growth.
In our experience, and as shown by several economic indicators, Glasgow city centre and the West End also continue to be property hotspots. The news that the next stage of the City Development Plan focusing on the Govan, Partick and the Clyde Corridor will be submitted to Scottish ministers is welcome and we anticipate this will provide impetus for the property market.
'Lack of second-hand stock'
Our business is focused on the West of Scotland and, for us, east and north Ayrshire has been a significant area for growth, with average transactions rising by 6.9 per cent and 2.7 per cent, respectively. Thanks to the improved road network, Ayr and Stewarton are attractive prospects as they are commutable to Glasgow. At the same time the property prices there are more competitive, with buyers getting more square footage and a garden for the same price as a flat in central Glasgow.
The biggest challenge currently is a lack of second-hand residential stock. The influx of new homes projects has helped keep the wheels turning. Projects that were halted are now either completed or well underway in terms of construction and consumers are snapping them up.
We are encouraged to see the Scottish Government’s ambitious net zero emissions target being reflected in many building projects. We are currently marketing City Garden Apartments, a new build of 65 eco-conscious, luxury apartments in Glasgow. Buyers concerned about climate change and their carbon footprint can benefit from state-of-the-art energy efficiency, electric car charging and an outdoor roof with a bee hotel. New build homes are also attractive to downsizers.
These consumers are moving to more urban locations, nearer restaurants and amenities, into lower maintenance and running cost properties. A garden is often replaced by a much more manageable balcony. A good example of an ambitious new project is G3 Square in Finnieston, which we’ve been supporting since the outset, as well as Cathcart House in the south side and the upcoming Fairfields, due to launch in Partick next year.
Another key trend is the number of small to mid-size luxury home developments springing up on the outskirts of Glasgow in areas such as Croftamie and Strathaven. These cater for millennials looking to lay down roots with a family home, who would be otherwise priced out of Glasgow’s “go-to” areas of Newton Mearns, Giffnock and Bearsden.
While life changes, like children or getting married, will happen regardless, there can be no doubt that many potential homebuyers view their next move as discretionary, as opposed to borne out of need. However, we know from lessons of the recession that the property market can survive extreme circumstances. Even though we can all expect more uncertainty, the desire for home ownership is a certainty.
- John Kelly is managing partner of Corum.