What Brexit means for the Scottish property market

Since the UK voted to leave the EU there has been much debate about its impact on the economy, and on the housing market.

Some commentators are predicting unfettered growth while others foresee a doomsday scenario.

The reality is that at this stage it is impossible to say what will happen, given that the terms of Brexit have yet to be negotiated.

What we can do is look at the long-standing trends and offer insight into how well positioned the market would be to withstand any downturn in buyer activity.

In the short-term there’s no question that some buyers and sellers are holding off from acting as they take a “wait and see” approach.

The latest figures from ESPC back this up. They noted that after the result on 24 June, there was an immediate drop-off in the number of homes going up for sale.

After this initial period of uncertainty though, we are likely to see things start to pick up again and we have already seen evidence of this as we moved into July.

ESPC reported that the number of properties coming on to the market rose and at Warners we’ve actually seen very little change in terms of supply and demand.

We’ve had quite a few questions from potential buyers and sellers, and one or two attempting to use the result to negotiate a better deal.

The reality though is that we’re still seeing lots of demand from buyers.

This is evident with properties still going to closing dates and the majority of sellers are seeing their homes achieve an offer that is equal to, or in excess of the home report valuation.

In areas of Edinburgh where demand is high, such as Morningside, it’s not unusual to see offers coming in at 15 or 20 per cent above home report valuation, such is the supply shortage.

Looking further ahead, the fundamentals of the market do remain strong.

Mortgage availability and buyer activity are at the highest levels since the downturn in 2008 and although the Bank of England held interest rates in July, it is not inconceivable it could yet reduce them further, making mortgage repayments more affordable for buyers and homeowners on flexible-rate mortgages.

Most people tend to buy and sell locally and in a fairly short time frame, and for these people little has changed with Brexit.

Investors within the UK may well be tempted to take a back seat for now which could negatively impact demand for buy-to-let properties.

On the other hand, with the pound having declined in value, property in the UK will have become increasingly attractive to foreign investors.

It’s also important to note that over the two years there has been a shortage of supply of properties coming on to the market relative to demand from buyers.

The rate at which we are building new homes is still well short of the projected growth in the number of households in Edinburgh meaning that any downturn in buyer demand would simply moderate house price growth.

Overall the likelihood is that we will see a slight dip in sales and listings across the market over the next few weeks but thereafter buyers and sellers will return once the terms of the exit from the EU are clarified and markets begin to stabilise.

David Marshall is operations director with Warners Solicitors & Estate Agents