Report reveals fears over Brexit impact on house prices

Scotland’s homeowners are becoming increasingly anxious about the impact Brexit will have on the value of their property, according to a new report launched today by Aberdein Considine in association with The Times newspaper.

The inaugural edition Scotland’s Property Monitor – a comprehensive new quarterly report on the Scottish homes and mortgage market – has identified the country’s housing hotspots.

The report blends Registers of Scotland and Council of Mortgage Lenders data and analysis with specially-commissioned market research and interviews to find out what the country’s homeowners are really thinking at this time of unprecedented political uncertainty.

Overall, 19 areas recorded growth in average prices in Q1 2017, with the Western Isles and South Lanarkshire - which takes in Greater Glasgow suburbs - enjoying the largest growth in percentage terms when compared with the same time last year. Thirteen areas saw average prices fall, including Aberdeen and Aberdeenshire.

Edinburgh tops the first Property Monitor league table with country’s highest average property price of £237,076 during Q1 of 2017 – a substantial 52.7% above the Scottish average of £155,277.

Here's a summary of the main findings. You can read the full report by clicking here.

Glasgow market flourishes

The report reveals a bright picture for homeowners in Glasgow, which is enjoying a prolonged period of property price growth following its belated recovery from the 2007/08 financial crisis.

The average selling price of properties sold in the city rose 9.4% to £140,671 in the first quarter – well ahead of the 1.5% Scottish average. The number of transactions has also jumped by 3.4% to just under 2,500 over the three months, during which time just under £350,000,000 worth of property changed hands.

Elsewhere, sales in all seven of the local authority areas which make up West Scotland increased during the first quarter of the year.

East Dunbartonshire - home to two of Scotland’s most affluent suburbs, Milngavie and Bearsden – has the third best performing market, just behind East Renfrewshire and Edinburgh.

Its average property price of £214,972 is up 4.5% on last year, while the number of sales in the region has also increased by 18.2%.

Together, these increases have helped raise the overall value of the area’s property market by a staggering 23.3% - and this is expected to keep growing.

Taking stock in Edinburgh

Rising property prices only tell half the story in the Edinburgh market, which appears to be malfunctioning.

As previously mentioned, Edinburgh has the country’s highest average property price despite competition from Glasgow’s affluent suburbs.

However, prices are undoubtedly being inflated by a lack of properties coming on the market for sale.

This is best reflected in the near 12% drop in transactions in the city, which also dragged the overall value of the market down by around 5%.

Therefore, we are continuing to experience a seller’s market, driving up prices amid unrelenting buyer demand.

Oil and the North-East market

Almost £3.5million worth of property is being sold every day in Aberdeen and Aberdeenshire as the North-East market shows the first signs of recovering from the oil crisis.

After almost three years of decline, home sales across the city and shire are still down, 12% and 10.6% respectively.

However, the rate of decline has slowed dramatically and the spring market was noticeably busier than in previous years. We are seeing quick sales and, perhaps more importantly, competition for properties, which has even led to some closing dates being set in recent weeks.

Stretched households

An unprecedented period of low mortgage rates has led to a resurgence in remortgage activity in Scotland.

The new figures also showed Scots borrowed a total of £1.8billion in the January-March period for house purchases - up 5% on January-March 2016.

However, our Property Monitor research found some concerning trends amid the mass lending.

Four out of five people surveyed (81%) said they would be adversely affected by just £100 being added to their monthly mortgage repayment. Of those, 29% said they would struggle to make ends meet.

That sum represents an interest rate rise of around 1%, which still feels unlikely at the moment, but who knows where the current political tide will take the UK economy over the next few years.

And of the people we surveyed who had a mortgage, it would appear that over half (58%) are paying too much. Average rates, depending on loan to value, are currently sitting between 1.75% and 2%.

So those paying 3% or more may be able to save money.

Brexit fears growing

Respondents to our Property Monitor research generally regarded the political and economic environment in Scotland as having a negative impact on the value of their property.

The prospect of a second referendum on Scottish independence incited the strongest negative response, with 58% saying they feared it would decrease the value of their home.

More than half (51%) said they thought Brexit would negatively impact property values. So on the face of things, people are marginally more concerned about Scotland staying in the UK than the UK leaving Europe.

However, when you compare the net balance results (purely measuring those who feel it will decrease the value of their home against those who feel it will increase), you see an interesting trend.

Worries about IndyRef2 have fallen back slightly, from a net balance of -52% to -48%, between March and May this year. Over that same period, fears over Brexit have increased from a net balance of -33% to -46%.

Scotland's property experts