Firstly, apologies to the loyal band of readers who have not had a blog since June 2016. This is perhaps a sign of me trying to comprehend a very unusual set of circumstances, also coupled with an increase in activity amongst my client bank. Rest assured, there will be more regular blogs from now on. Before I give you my predictions for 2017, how did I get on in 2016? Well, as I have said before, 2016 proved the most unusual of years for the property market. My catchphrase for 2016 was “cautiously optimistic” with a concern regarding various changes including the LBTT and additional dwelling supplement, the Scottish Government election in 2016 and also the impact of a vote on Brexit. Whilst I am still awaiting the final figures for the Scottish-wide property market for 2016, my feeling is that they will show a contraction in the number of properties coming on to the market of an average of between 6% and 9%. This is a considerable contraction and one which is showing in relation to the spike in house prices in certain areas. I would refer you to a previous blog “Stagnation Not Bubbles”. The change to LBTT and the introduction of the additional dwelling supplement has had a catastrophic effect on the housing market. Once again 2016 showed the Aberdeen market continue to reflect the low oil price but Edinburgh and Glasgow also showed signs of a slight slowdown which was also reflected in the Dundee market. Again, I await data from the Council of Mortgage Lenders to confirm this feeling.
In summary, instead of the second half take-off as I was expecting from August, 2016 continued to stutter along with the property market at best plateauing and at worst showing serious contractions in certain areas.
So what of 2017? Unlike the last couple of years, I would say that I am slightly more negative and am probably best described as cautious, losing the word “optimistic”. I think that 2017 will be unchartered territory as the impact of Brexit, be it soft or hard, starts affecting people’s buying power. The continued uncertainty of Indy 2, the negative impact of the additional dwelling supplement and Scottish Government policies that in general seem to be anti-home ownership but are certainly anti-property investor, will all have an impact. I think that we will continue to see low interest rates and good mortgage deals and I suspect there will be a further contraction in relation to the size of the market, but possibly not as large as some commentators are predicting. I have seen contraction predictions in excess of 10%.
In relation to the property market, my wish for 2017 would include increased assistance for first-time buyers at the lower end of the price bracket, a review of the LBTT bandings and the removal of the additional dwelling supplement. These are very similar to last year and each deserve a blog in their own right. Sharp-eyed readers will note that I have dropped my call for the removal of the Home Report but this by no means signifies an acceptance, rather more a “what’s the point of calling on deaf ears”.
In summary, I am predicting a 5% decrease in market activity with a slight increase in house prices averaging around the 2% to 4% mark. Again, the figures I would urge readers to look at are the number of properties coming on the market in Quarter 1.
I wish all readers a Happy New Year and I will continue to keep you advised of trends in the property market.
Partner – Head of Property