Estate agents do not believe a housing market crash will occur in the coming years despite forecasts of a recession for the UK and the ongoing cost of living crisis.
A report by experts at Rettie has found that businesses boomed after the end of the pandemic lockdown in 2020 and will likely sustain house prices even if interest rates rise and make getting a mortgage harder and more expensive.
It predicts that the average price of property in Scotland could rise by around two per cent each year to a peak of £250,000 by 2027.
Rettie’s Scottish Residential Sales Market Briefing said that crashes are usually preceded by booms in the market — but the slowdown during the pandemic meant this was not the case at present.
Demand for housing continues to outstrip supply, meaning the market is likely to be insulated against the forces buffeting the wider economy.
A lack of housebuilding in recent years has contributed to the situation, with the average with the average completion rate for new builds running at just over 17,000 units per annum.
The report said that a recent study by Homes for Scotland has suggested completions in Scotland need to rise to 25,000 per annum to meet demand.
Average prices in Scotland grew by 5% during the first half of 2022, while the highest growth in sales since 2019 were found in Aberdeenshire (up 38%), the Scottish Borders (up 24%) and Perth & Kinross (up 22%)
Average prices have grown fastest in Inverclyde (up 44%), the Scottish Borders (up 39%) and Argyll & Bute (up 30%).
Simon Rettie, Managing Director, Rettie & Co. said: “In over 30 years selling and letting properties in Scotland I have never experienced a level of activity and sustained demand such as we have seen post Covid.
“It has been quite extraordinary. This demand has been evident in sales across the country, as John has commented, and equally as high for rental properties.
“We are expecting to go into more seasonal markets as we venture forward but are confident there will be a continued demand for quality sales and rental properties.”
Dr John Boyle, Rettie & Co.’s Director of Research & Strategy added: “We have had a good return to business since lockdown ended in June 2020 and the strength of the recovery has surprised us.
“We do expect market conditions to toughen but the market remains in a state of excess demand, which is supporting activity and prices.
“A significant downturn is not currently expected but lending levels and unemployment will be the key bellwethers to watch to see how this plays out.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here