Scottish independence ‘affecting’ property market

HOUSE sales reached a six-year high in July, although uncertainty linked to the independence referendum is “leaving its trace” on the property market, according to a report.

Uncertainty linked to the referendum has 'left its trace' on the property market. Picture: Stuart Cobley
Uncertainty linked to the referendum has 'left its trace' on the property market. Picture: Stuart Cobley

The latest house price index from LSL Property Services/Acadata recorded 9,285 transactions in July, climbing 5 per cent from June to reach the highest monthly total since July 2008.

While the figures reflect a “serene” picture in the housing market that month, the report also found that ambiguity surrounding Scotland’s future “isn’t helping” the market’s delicate recovery.

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Writing in the report, Gordon Fowlis - regional managing director of Your Move, said: “You can’t walk down the street without feeling the force of the independence debate. But on the surface, July’s figures point to a strangely serene Scottish housing market that was not yet expecting such a close-fought storm.”

He said places such as Aberdeenshire and Edinburgh have seen transactions soar by 20 per cent and 25 per cent respectively over the past year.

But he added: “On the other side of the coin, uncertainty is leaving its trace - and squeezing supply has seen slower overall transactions growth compared to last year.

“Higher up the chain, any prospective sellers with the luxury of time are hanging on to see which way the tide turns before they put their home on the market.

“However, depending on the outcome of the referendum this could reverse rapidly. There is a chance of a mass take-off and sale of investments, which would disrupt house prices in the short-term.

“Scotland’s housing market recovery is still in the delicate stages of rehabilitation, and the number of completed sales in the last 12 months still only represents 70 per cent of the average over the period 2004-2007.

“Ambiguity surrounding Scotland’s future isn’t helping. We are in the throes of the longest period of sustained monthly house price growth since February 2007, but only time will tell whether this recovery will be derailed.”

Mr Fowlis said a Yes vote would usher in “a further 16 months of uncertainty”, opening up questions on currency, exchange rates, mortgage risk, and property taxation. A No vote does not guarantee clarity either, “but the mist of ambiguity would clear sooner”, he argued.

He added: “Whichever way the chips fall on Friday morning, two million unhappy people will wake up in a divided Scotland, with a rift carved through society. This division will not easily be overcome, and it is the job of businesses to keep calm and carry on as usual.”

The average house price in July stood at £164,483 after monthly growth slowed to 0.2 per cent. The figure, however, is up more than 5 per cent on the same time the previous year.

Writing in the report, Dr Peter Williams - housing market specialist and chairman of Acadata, said: “Placing Scotland’s 5.7 per cent annual increase in house prices in a UK context, the rate is higher than the rises currently seen in Wales, the Midlands and the North of England, but is below those seen in the South West (5.9 per cent), East Anglia (6.5 per cent), the South East (9.4 per cent) and lastly Greater London (20.6 per cent).”

He said it will be “fascinating” to see how the housing market performs over the next few months.

“The referendum is without doubt creating a degree of uncertainty in people’s minds, and uncertainty tends to imply that individuals will be somewhat reluctant to enter into long-term commitments, such as buying a property.

“However, the housing statistics for July show no evidence that the forthcoming referendum has started to take a toll. Transactions in July were the highest for six years and prices continued to rise.

“In Aberdeen, a new upmarket development saw the sale in July of five apartments in the city centre, all with a price tag in excess of £1 million. Confidence does not therefore appear to be eroding. We will be monitoring next month’s statistics with extra diligence.”