The Scottish housing market weakened in November with lower supply and demand, but expectations for next year have improved with an easing in mortgage rates in recent weeks.
The latest RICS Residential Market Survey released today shows the majority of surveyors reported a fall in sales last month as higher interest rates and wider economic uncertainty continued to weigh on the market. This led to a fall in prices, though the decline was significantly less than the UK average.
READ MORE: Scottish house prices rise despite weakening demand
“The base rate looks reasonably stable and lenders are starting to compete for business with competitive mortgage rates," said Greg Davidson of Graham+Sibbald in Perth. "This combined with more reasonable inflation figures seems to have created some reassurance which should create a more positive market into 2024.”
A net balance of 17% of respondents in Scotland noted a fall in new buyer enquiries. Although remaining in negative territory, this was an improvement on the previous two months.
Regarding supply, surveyors reported that new instructions fell at the fastest rate since summer, with a net balance of 25% of Scottish respondents noting a fall in new instructions to sell.
With both demand and supply on downward trajectories sales were also said to have declined, with a net balance of 42% reporting a fall in November. Looking over the past three months, a balance of 7% in Scotland reported falling prices, compared to the UK average of 43%.
Regarding the outlook, a net balance of 6% of Scottish surveyors expect a fall in prices over the next quarter, and sales are anticipated to fall flat over the same period.
However, 12-month expectations for both prices and sales improved. A net balance of 22% of respondents in Scotland expect prices to be higher in a year’s time and 10% expect the number of sales to be higher.
In the rental market, the imbalance between supply and demand eased through November as demand for lettings was reported to have fallen flat.
READ MORE: Scotland houses: Prime market strongest in UK and Glasgow up
Looking at landlord instructions, a net balance of 13% of those surveyed in Scotland also noted a fall in supply. Although in negative territory, this was an improvement from the net balance of 80% who reported a fall in supply in June of this year.
With this supply and demand dynamic, a net balance of 38% of respondents in Scotland expect rents to increase in the three months ahead, just below the UK average of 42%.
Grant Robertson of Allied Surveyors in Glasgow said: “Rental demand has fallen but that is always seen around this time and there is some softening on rent levels. With more legislation pending in 2024, uncertainty remains in the market for new entrants.”
RICS chief economist Simon Rubinsohn said sentiment across the UK property market is a little less negative than was previously the case. This was aided by increased confidence that the interest rate cycle has peaked, with "somewhat more competitive mortgage products" coming to the market.
“However, with the cost of money likely to remain elevated for some time to come and the economic outlook still downbeat, it is not surprising that the overall tone to the anecdotal remarks from survey respondents is still quite cautious," he added.
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