Pragmatism will be key for property buyers and sellers - Wilson Browne
We all know that the pandemic saw the property market rocket, driving increased prices and transaction levels from 2020 through to mid-2022. However, while the spring market will be the real test of market confidence, the pandemic market surge has now passed.
The cost of living crisis and the recent rise in interest rates will also have an impact on the market. We can expect to see both buyers and sellers being cautious moving into spring, and it’s likely that the level of transactions across the UK will fall given the wider economic situation.
Property commentators are forecasting a drop in prices of up to 5 per cent, however, Edinburgh has always been a healthy market, as has East Lothian, and both are well-protected due to high demand to live in the East. Properties in desirable areas across the city especially should be insulated from the suspected market rebalancing while rural areas that were boosted during the pandemic could see a drop in prices depending on both location and the type of property.
The Bank of England expects inflation rates to fall towards the end of the year which should see interest rates stabilise more and allow for a decent level of borrowing, as well as some much-needed relief in the cost of living. However, those who benefitted from the low interest fixed-rate mortgages that were available during the pandemic will find their borrowing becomes more expensive as these come to an end and they have to renew their terms at a substantially higher rate. This could see some distressed sales and an unfortunate increase in repossessions.
Landlords have had a difficult time with the Scottish Government’s pandemic and cost of living influenced rent controls and eviction bans. With an extension to the eviction ban recently announced, there is some relief for landlords with the news that rents can be increased by 3 per cent and, in certain circumstances, by 6 per cent. However, this still provides difficulties for those who wish to sell and realise their investment while the eviction ban is in place.
Ultimately the decision to buy or sell a property is always going to be a personal one regardless of changes in the market. We would encourage buyers and sellers to remember that the pandemic drove the market exponentially from 2020 until the middle of last year and that those were not normal circumstances.
With Covid thankfully in the rear-view mirror we have to recognise that economic conditions have changed and that these changes will bring a market rebalancing that will see both buyers and sellers need to become more pragmatic and flexible to deal with.
Wilson Browne, Partner at Coulters Property
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