During 2021/22, the Scottish property market witnessed one of the most buoyant and frantic periods in its history with property prices increasing 11.2%, over the course of 2021, according to the UK House Price Index Scotland. During the initial lockdown period many buyers yearned for a home with outdoor space and, due to a lack of spending opportunities, actually managed to increase their savings to put towards a new home. This, combined with the LBTT holiday and exceptionally low interest rates, resulted in huge levels of demand being unleashed after the initial lockdowns.
Will this trend continue in 2022? Well, fundamentally the housing market is very simple and driven by the most basic economic concept: supply and demand. For a long time, even before the post lockdown boom, demand has been outstripping supply in Scotland. This is very good news if you are a seller as you can benefit from competitiveness amongst buyers, to push up your sale price. If you are a buyer, on the other hand, you may need to bid well in excess of the Home Report valuation in order to secure your dream home. We expect this trend to continue throughout 2022 - however, it must be said that we do anticipate the frenzied characteristics of the 2020-2021 market to subside and more steady price movements to make a return.
Supply and Demand - what to expect
First time buyers are the lifeblood of the property market and a key component to maintaining high levels of demand. To help further encourage first time buyers, the Government has reintroduced guaranteed 95% Loan-To-Value mortgages which will make borrowing even more affordable for those getting started.
Many are aware that The Bank of England has recently increased interest rates in a bid to stave off inflation and while this does increase the cost of borrowing it is very important to remember that historically speaking rates are still exceptionally low and most mortgage deals are still highly attractive. Assuming rates do not increase substantially, we would not expect a significant decrease in approved mortgages nor a drop in the number of first time buyers.
Supply of new homes is also expected to be dampened as the construction sector has been particularly badly hit by the effects of the pandemic; the cost of building materials increasing substantially, post Brexit labour shortages and high rates of staff illnesses causing delays to many projects. With fewer new properties coming to the market buyers will need to compete fiercely for the limited number of existing properties that are available, further stacking market forces in sellers’ favour.
Many who own property have seen their equity rise substantially due to record breaking price increases. Those who have chosen to sell have been able to take that profit and reinvest it into new homes as they journey further up the ladder. The most popular ‘upgrade’ property we have seen is the semi-rural, detached home with plenty of garden space, which has achieved unprecedented levels of demand with multiple offers being received at closing dates well in excess of the Home Report valuation. Peebles is especially attractive to this demographic of buyers as it offers the space and peace of country life while still being within a commutable distance of the capital.
It is of course wise to acknowledge current economic uncertainty. Inflation, increasing interest rates and the cost of living crisis, could all have an impact on the housing market, as could other world events. However, to counter this there are still very affordable mortgages, increased equity in current homes fueling upward mobility and a limited supply of new build homes. We are therefore confident that 2022 will enjoy high demand and continued growth in sale prices.
There has never been a better time than now to get your property on the market, so if you would like to find out how much your property could be worth then please do get in touch for a free, no obligation property valuation today:
Estate Agent | Blackwood & Smith LLP