Housing market will be more subdued in 2022, but prices will still rise - Mike Fitzgerald

From rapidly rising house prices and excellent sale prices, sometimes 40 per cent over valuation, to the huge volume of sales and record selling times, the Scottish housing market has enjoyed exceptionally strong growth.

Mike Fitzgerald is executive chairman of Coulters
Mike Fitzgerald is executive chairman of Coulters

In fact, according to the UK House Price Index Scotland, Scottish house prices performed better than the UK rate of 11.8 per cent (Sept 20-Sept 21), reaching 12.3 per cent by the end of Q3, with detached properties enjoying the biggest hike in price, up to a staggering 16.5 per cent.

Throughout 2021, the race for space was commonplace as, post-pandemic, people sought bigger properties. New hybrid working models meant that location was no longer an issue and buyers could pursue dream homes and a different way of life in suburban, semi-rural and rural areas.

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At Coulters, the team witnessed a significant rise in demand for additional space to work, extra living space to enjoy and outdoor garden space. It came as little surprise that, as well as the near 17 per cent increase in detached homes, the UK House Price Index Scotland (Sept 2021) reported a 12.2per cent sale price increase in semi-detached houses, with terraced properties up 13.1 per cent.

With demand outstripping supply, buyers were often willing to pay way in excess of the Home Report valuation to achieve their dream home goals. Even as 2021 drew to a close, attractive properties which are well located were still selling at a high premium over valuation.

There is some apprehension from buyers and sellers that the housing market within Scotland is set to stall in 2022. Admittedly, the level of activity from post-June 2020 has been at historically high levels and just isn’t sustainable. However, property professionals are all in agreement that house prices in Scotland will continue to rise – it will just be more subdued.

The Coulters team forecast that transactional activity will be down slightly in 2022, but good homes with outdoor space will continue to sell for a premium. Buyer demand in Scotland will continue to outweigh supply, fueling price increases which we estimate to be up to ten per cent. This projected increase reflects what we think will be a steadier and slightly cooler market.

We also believe the current low mortgage rates will continue to motivate buyers to make the move in early 2022, supporting further price growth. However, if inflation continues to rise it is likely that the Bank of England will raise interest rates which will affect affordability. This concern may stimulate a surge in sales in Q1 as buyers look to secure fixed rates mortgages and lock in rates.

City centre flats, which made a recovery this year of nine per cent, will also enjoy growth in 2022 as retail, hospitality and tourism continues to improve. The re-introduction of government guaranteed 95 per cent LTV mortgages will also further boost this type of property as first-time buyers look to get onto the property ladder. Borrowing affordability for first-time buyers will remain key to the market.

At Coulters, we’re positive and are looking forward to a successful 2022. So long as the underlying health of the economy continues – with job security, strong income levels and affordable borrowing – 2022 will be another great year to buy and sell within Scotland and the competitive rising market will continue.

Mike Fitzgerald is executive chairman of Coulters

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