Property bubble alert as demand outstrips supply

'The housing market is gathering momentum', according to the director of RICS Scotland. Picture: PA

The Royal Institute of Chartered Surveyors (RICS) Scotland said more than half its registered members reported price rises – the highest rate for five years.

Separate data from an umbrella group representing property solicitors showed sales in Scotland grew by 29 per cent in the three months to September.

Prices in some areas where there are more would-be buyers than homes on the market have soared by as much as 20 per cent, figures from the Solicitors Property Centres Scotland showed. And that has prompted warnings of another housing bubble, as buyers battle to secure the few homes on the market.

“The housing market is gathering momentum and buyer numbers are on the rise across Scotland,” Sarah Speirs, director of RICS Scotland, said.

“That said, the number of homes currently up for sale is still nowhere near enough to keep up with demand and, in order for the market to function correctly, this imbalance urgently needs to be addressed.

“If we are to create a more sustainable market, it is critical that many more good-quality homes are built in areas where people want to live.”

Those responding to the RICS survey reported “encouraging levels of activity” but a “noticeable shortage of new stock” in some parts of the country.

Property experts have heralded the return of the “offers over” system which involves sealed bids after a seller has set a closing date. At the height of the property boom, properties were attracting bids of up to 30 per cent over the asking price.

Kevin Macdonald, a surveyor at Graham and Sibbald, said: “This year has seen a marked increase in numbers of purchasers looking to buy and prices being paid, with many properties also now taking less time to sell than had previously been the case. The reintroduction of closing dates is a further positive sign.”

Individual agents have reported a “critical” gap between supply and demand.

“The problem comes down simply to supply and demand,” said Robert Carroll, managing director of MOV8 Real Estate in Edinburgh, which has begun to offer incentives to encourage people to put their properties on the market during the traditionally quieter winter months.

“We’re starting to reach critical levels – very soon we’ll run out of properties to sell.”

Solicitors across Scotland sold more than 8,000 houses during the third quarter of the year, up from a little more than 6,200 during the same period in 2012, according to data from Solicitors Property Centres Scotland.

Its chairman, Peter Ryder, said: “There is growing confidence among solicitor estate agents that the property market is starting to gather momentum, at least in terms of sales.”

The group’s sales figures over the past year ranged from a 20.5 per cent rise in the Scottish Borders to a 14 per cent drop in Moray. Edinburgh prices went up by 1.7 per cent, while in Glasgow, they fell by 6.3 per cent.