House prices and property sales in Scotland are set to rise in the next year driven by strong demand for mid-market family homes.
In a survey of solicitor estate agents across Scotland conducted by SPC Scotland, eight out of 10 solicitors active in the property market forecast a continued rise in sales. Two thirds said that they also expected prices to rise, but the majority said that they believed the rise will be modest – less than five per cent. Almost a third of all solicitor estate agents were more cautious and expected no change in prices at all.
Two out of three solicitor estate agents agreed that demand was strongest for mid-market family homes with a third reporting strong demand for flats.
The strong preference for more affordable homes can be partly explained by the return of the first time buyer and renewed buying by landlords. Almost three quarters of solicitor estate agents reported that first time buyer activity now is stronger than it was this time last year. And a third said that there had been an increase in buy-to-let acquisitions.
Despite the two Help to Buy schemes, the majority of solicitors still report that raising the deposit required to obtain a mortgage remained the biggest obstacle to buying for their clients.
Three quarters of solicitors also forecast an increase in the number of properties coming on to the market, but there was less agreement on the expected scale of any growth. Just over half expect less than a five per cent increase in the number of homes for sale while 40 per cent are more optimistic and forecast five per cent plus growth. The eventual outcome is of more than academic interest since the current shortage of homes coming on to the market is believed to be a key driver of recent price increases.
Looking at the results, it seems that the return of first time buyers and others changes the pattern of demand for property. The renewed interest in mid-market homes and at least some recovery in prices should allow thousands of homeowners to successfully sell their homes which might, until recently, have struggled to find a buyer.
At the same time, the improvement in mortgage availability largely triggered by the two Help to Buy schemes should make it possible for those whose ambition to buy had been thwarted by a requirement for a substantial deposit to make their move.