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Apologies for the delay in getting this blog to you – a sign of increasing activity in 2015?! Before I give you my predictions for 2015, how did I get on with 2014?.
I predicted the start of an upturn in the property market with a 10% increase in activity levels and a small increase in the average house price. I also said that the developers would require to take-up the strain and that there would be a requirement for Government to provide assistance to the property market, both new-build and first time buyers. I warned about the impacts of the Referendum and also drew your attention to certain changes including Stamp Duty.
So what was the actual outcome for 2014? One of the things that has amazed me during the course of last year was the number of conflicting headlines and reports backed up by meaningful data showing either an overheating property market, a cooling down property market, an increase in first time buyers, a decrease in first time buyers and I think that reiterated to me the thoughts that I had had in the past in relation to the danger at looking at one headline or stat in isolation. My feeling is that there has been an increase in activity in the Scottish property market at approximately the 10% level – this is in relation to the number of transactions. There has been a slight increase in house prices, although properties in certain areas – in particular school catchment areas and where there is a shortage of properties – have shown big increases on recent years. There is still a glut of first time buyer properties in the market.
The rush of properties coming on to the market in the first 3 months of 2014 that we predicted didn’t happen and we also had the MMR Review which had a big impact in relation to mortgage lending and the speed of lenders getting decisions and loan papers to clients. I believe that the lenders were much more focused on controlling their lending and this was noticeable in relation to the peaks and troughs of mortgage availability.
The Referendum in September had a bigger impact on the residential market than we had anticipated, causing a massive slowdown from summer onwards. Whilst there was a slight spike in October and November it was not quite as much as I would have anticipated given the previous quarter’s slow down. We also had the announcement of the Scottish Government’s plans for Stamp Duty (LBTT) – see previous blogs and also comments to follow. In relation to property investors and developers there was a slight increase in the number of coming in to the market. Whilst the developers showed very good figures they did not have enough stock to meet the demand. Interestingly Taylor Wimpey have just announced their 2014 UK figures showing a 10% increase in activity and a 6% increase in house prices – very much following my own predictions. We also had the publication of the Scottish Government’s 5 Year review into Home Reports – a document which I take great exception to and will write a blog shortly.
So what of 2015? I believe that there will be an increased improvement in 2015 although my mantra is “cautiously optimistic”. I would once again be predicting a 10% increase in market activity with a slight increase in house prices, probably averaging around the 5% mark. I think lenders will continue to grow in confidence and that there will be an increase in property investors. This will assist in relation to clearing some of the glut of first time buyer properties and also improving the quality of properties available to the increasing number of people who are looking to move property but cannot afford to buy so will need to rent.
There are some potential bumps on the road. I would be concerned as to what effects a slowdown in the Eurozone has on the British Banks and in particular their appetite to support mortgage funding. In April we have the launch of the Scottish Government’s Land and Business Transaction Tax, the replacement for SDLT, and whilst I welcome the progressive nature of this Tax I am very much of the view that they have got their bandings wrong and that their bandings will have a detrimental effect on the Scottish property market. I am strongly campaigning for a rethink prior to the launch of this scheme.
In May we have the General Election and whilst I do not think that there will be the same uncertainty as there was in relation to the Referendum, I think there may be some economic uncertainty and I have a concern regarding the proposal for a Mansion Tax. I am also concerned that the General Election will cause the Scottish and UK Governments to take their eye off the ball in relation to supporting the property market which, although it’s out of intensive care, still requires some therapy and I am hoping that there will be schemes to assist developers and first time buyers. Again the figure to look out for is the number of properties coming on the market in the first 3 months of 2015
I wish all readers a belated happy new year and I will continue to keep you advised of trends in the property market.
Partner – Head of Property