Last week revealed a gap almost as big as the difference between house prices in Murrayfield and Muirhouse with a rather public difference of opinion between the Royal Institution of Chartered Surveyors (Scotland) and Edinburgh Solicitors Property Centre.
The RICS reported a slump in the market north of the border during February, claiming that the number of properties on sale was down for the fourth consecutive month. It added that Scotland had the weakest figures for new buyer inquiries of any nation or region in the UK and suggested that the situation was down to potential vendors holding back, partly as a result of lockdown.
For its part, ESPC solicitor-agents retorted there had been significant buyer demand and enquiries for homes. It claimed, for example, that: over the past three months in Edinburgh, Lothians, Fife and Borders, the average selling price rose by 6.2 per cent year-on-year to £265,446 and the volume of sales during this time was up 42.2pc year-on-year; the median time for properties to be placed under offer was 20 days, six faster than last year; and the average Home Report valuation attained over the past three months was 102.7pc compared to 102.1pc last year.
As someone who does not belong to either of these august bodies, I believe it possible that both may not be contradictory and I’ll attempt to explain why.
Yes, some would-be sellers are adopting a wait-and-see strategy. Even if not concerned about job security, there is continuing uncertainty about lockdown. While this continues, some might decide that spending the summer months catching up with other family members is more important than moving house. Others might give greater priority to booking two weeks in the sun, given how long this has been denied them. Yes, if an underlying desire exists, a move will happen but in some cases this may be delayed until the autumn or even later.
Yet just as the ESPC claims, the market, at least in South-east Scotland, has remained stronger than anyone could have imagined. Demand in the most popular areas is near to normal although savvy vendors realise that being realistic on price brings its reward in a swift and satisfactory sale. In this market, with everyone in the same boat, swings and roundabouts applies – i.e. what a seller might lose in accepting a price slightly below expectations is compensated for by the price he or she pays as a buyer.
So you could say the market, as things stand, is well-balanced but it is still walking a tightrope and potentially subject to matters way beyond its control. For example, President Biden’s $1.9 trillion giveaway to re-energise the American economy is raising fears of inflation on both sides of the Atlantic and, with it, a rise in interest rates, which is the last thing homeowners in this country need.
Consequently the decision by the Scottish Government to end the LBTT holiday on sales up to £250,000 is even more of a disappointment. Whereas England and Wales will continue with a threshold of £500,000 for several months yet, in Scotland it will be reduced to £175,000 and apply only to first-time buyers.
The figure set by the Chancellor, Rushi Sunak, reflected the huge regional difference in the English market whereas his counterpart in Scotland seems to think the situation here is more homogenous, which it is not. A threshold of £250,000 might not have made any difference to someone buying a former council house in Coatbridge but it would have been of enormous help to those trading up from a first to second home in hotspots like Edinburgh and East Lothian.
Indeed, rather than reduce the Scottish threshold a case could be made for actually raising it, giving added impetus to the middle market and by implication also boosting “big ticket” transactions at the top end – on which, of course, the highest rates of LBTT are payable (Ms Forbes please note).
David Alexander is managing director of DJ Alexander