Following the Westminster General Election results what now for the Edinburgh and Scottish property market?
According to the ESPC there remains a continued shortage of properties for sale in the first quarter of 2017. Consequently, average selling prices in the East Central area of Scotland were up by 5.7 per cent to £217,455, and in Edinburgh city centre they are up by more than 11.6 per cent.
On a localised basis there was strong growth in the New Town and West End where average selling prices increased 12.3 per cent, in Stockbridge 16%, and in Morningside and Merchiston a very robust 18 per cent.
Maria Botha-Lopez of the ESPC said: “As has been the case over the last year, we are in a seller’s market. This means higher average selling prices, a shorter time to sell, and a likelihood for the selling price to achieve or exceed the Home Report valuation”
The question for future buyers and seller is will the political and economic uncertainty affect this robust property market?
Housing surveyors, JLL, have forecast Edinburgh property prices will increase by 23.4 per cent by 2021. This is nearly twice the UK average and four per cent ahead of London’s property market.
Jason Hogg of surveyors, JLL, believes: “With demand for housing outstripping supply, particularly within Edinburgh city centre, rental and house prices are forecast to outstrip the national average by 2021.” “Residential construction activity is being starved of development opportunities, made clear by a lack of cranes across the skyline, suggesting the tide isn’t set to turn dramatically in the next four years.”
David Alexander, managing director of city firm DJ Alexander agrees with this assessment:
“We’re very much in a two-tier market. A house that’s worth £200,000 today has every chance of being worth £250,000 in four years’ time.”
Following the 2015 changes to the Land and Buildings Transaction Tax (LBTT) he foresees a continuation of Edinburgh’s two tier market. “A house that’s worth £1 million now is never going to go up by 23.4 per cent in value in that time (by 2021).” He predicts that “properties selling for £350,000 and above would see less of an increase and over £1m there was likely to be virtually no movement at all”.
For those who are fortunate enough to raise a deposit, the supply of all time low mortgage rates will continue to grow this market segment.
This month Yorkshire Bank and HSBC are offering mortgage deals with a 10% deposit from as little as 1.97% and 1.94% respectively fixed for 2 years (plus arrangement fees).
Even longer term fixed rates for 10 years are also at all- time lows with opportunities for equity rich borrowers with 40% to obtain terms from First Direct and Coventry Building Society offering rates from as little as 2.49% (plus arrangement fees).
We think once the inflationary pressure of Sterling’s recent fall dissipates, low mortgage rates will continue to be available for some time yet, and continue to be the significant driver of further increases in Edinburgh’s two tier property market.