Time for another Scottish and wider UK property market outlook from Edinburgh Self Storage – this time for 2023. Remember, we’re the best storage facility in town if you’re about to move home or you’re between homes and need to store furniture or other items for an interim fix, or for a longer-term safe, quality solution!
Scottish residential property market in 2023
Let’s begin with a UK-wide outlook, and residential property sales will hit over 1m in 2023, despite market wobbles – that’s the view of Peter Ryder, managing director of Thorntons Property Services.
Why? Because stabilising interest rates combined with a high proportion of cash buyers could help insulate Scotland from volatility south of the border.
His comments came after the Royal Institution of Chartered Surveyors (Rics) released figures signalling that UK house prices have stalled after two years of growth.
Said Peter: “The property market in Scotland is less volatile regarding house price stalls and falls when compared to the south.
“Around 50% of all buyers are either cash buyers or take out mortgages of less than 50%. Even with the increase in rates they will still be able to afford to buy property.
“Just over a fifth, 22%, of buyers get mortgages between 50% and 75% loan to value while about a quarter – 26% – of buyers get mortgages between 75% to 90% loan to value.
“Rates are expected to settle around 4.5% to 5.00%. This is less than was expected a few weeks ago. All lending institutions are in a much stronger financial position compared to a decade ago and have money to lend.”
People still want to move but offers above asking price are decreasing
There’s always going to be some movement in the property market in spite of economic forces, but the market is changing.
Said Peter: “People still want to move, in 2008 during the last recession when banks were struggling to lend 800,000 clients still moved house.
“Offers above asking price are decreasing. This means some potential buyers who have left the market due to being outbid for the properties they were after will re-enter the market and try and secure a property around the Home Report value.
There exists an imbalance between properties for sale and buyers
Get ready for a time of readjustment and buyers returning to the market to redress the imbalance between properties for sale and buyers.
“There is still an imbalance between properties for sale and buyers. The market is currently in a period of readjusting, but we still have plenty of motivated buyers out there who will return to the market once the government have demonstrated they have the economy back under control.
Peter’s 2023 predictions for the UK and Scottish property markets
“My prediction for 2023 is between 1 to 1.1 million UK house sales. This is down on this year’s figures, however is still a lot higher than 2008, which is welcome news for the Scottish residential market following the uncertainty that has affected the marketplace in recent months.”
UK and Scotland commercial property market in 2023
Property investment markets are expected to emerge from a time of uncertainty, and pricing will likely stabilise towards the end of 2023, with a continued trend toward quality and sustainability.
Steven Newlands, head of capital markets for CBRE Scotland, anticipates further inbound investment into the UK market.
Speaking to insider.co.uk, he said: “While we forecast investment volumes will drop somewhat, the UK real estate market benefits from a diverse investor base – the realignment of prices towards the end of 2022 means that 2023 may provide opportunities for private capital to enter the UK market.”
Sustainable offices
Greater mandatory disclosure requirements and high energy prices will likely accelerate sustainability action within the market, from both investors and occupiers. Buildings with greater energy efficiency, like many new offices, likewise those with onsite renewables might better withstand the rigours of the energy price shock.
A dip in office-based employment in 2023 because of home-working is likely to further dampen office leasing activity, but the appetite for properties that are newly developed and sustainable looks to remain buoyant in 2023. Retrofitting existing business offices also looks to like being a key growth driver.
Scottish commercial property market in 2023
Also speaking to insider.co.uk, David Smith, managing director of CBRE in Scotland, spoke about the commercial property market in Scotland, broken down into Edinburgh, Glasgow, and Aberdeen.
Edinburgh commercial property market in 2023
Said David about the Edinburgh commercial property market in 2023: “In Edinburgh, the short to medium term supply pipeline is a real concern – for Scotland’s capital to have this little future stock is an issue if we are seeking to attract new corporate occupiers into the city.
Glasgow commercial property market in 2023
Focussing on the Glasgow commercial property market in 2023, David said: “In Glasgow, 2022 has been slow in terms of activity, where you could say this is linked to a lack of quality product – Grade A vacancy is 0.4% – however, it is likely linked to getting people back into offices.
Aberdeen commercial property market in 2023
He concluded with an evaluation of the Aberdeen commercial property market in 2023: “The Aberdeen market is counter cyclical to the rest of the UK market – having experienced a challenging period since the last energy sector downturn, the occupational and employment market in the north east is the strongest it has been for eight years.”
Sources:
https://www.thorntons-law.co.uk/
https://www.insider.co.uk/
