RICS: Activity remains subdued in Scottish housing market

Sales across the Scottish housing market remain flat in the run up to Christmas, according to the November 2017 RICS UK Residential Market Survey.

In November, new buyer enquiries were flat across Scotland. Last month, -4 per cent more respondents saw a fall in new buyer interest with respondents once again suggesting that the lower end of the market is more active.

Newly agreed sales also remained flat in November across Scotland. With the exception of Wales and Northern Ireland, where the feedback on the sales picture was reasonably positive, the numbers were either a flat or negative across most other areas of the UK.

But going forward, 29 per cent more respondents to the Scotland survey expect sales to pick up across the coming three months. This is despite new instructions to sell continuing to deteriorate in November, as the supply crisis continues (-22 per cent net balance over the month).

To give some idea of the future of new instructions coming on to the market, contributors were asked to compare the number of appraisals that were undertaken in November with the same period last year. Nationally, the largest share of respondents (49 per cent) noted appraisals were lower, while only 15 per cent stated they were higher on a like for like basis. As such, this does not bode particularly well for the new instructions pipeline.

However, contributors are optimistic that the market is going to gain momentum in the coming months and expect possible Budget changes to bolster the market in 2018.

Hew Edgar, RICS Policy Manager, Scotland, said: “Once again, the most common theme returned from Scotland’s survey respondents involves LBTT and the negative impact it is having on the middle house price bracket and above.

“Reviewing the operation of the current LBTT should be a Scottish government priority as its current framework is limiting market activity from the middle to the prime brackets in Scotland. Not necessarily transactions, but instructions to sell and interest in marketed properties, and this is having detrimental trickle-down effect in other house price brackets.

“There have been suggestions that the Scottish government will emulate the UK government and scrap LBTT for first time buyers. Whilst this may stimulate activity at a time when the market is subdued, it does not tackle the overarching problem of a lack of suitable accommodation across the housing tenures.

“Similarly, the current LBTT regime is already aimed at assisting first time buyers and those operating in the lower end of the house buying market. Whilst further support could enhance affordability, it could also increase the number of participants operating in the lower end of the market which could serve to increase house prices.”