05 Jan Predictions for 2017 in the Scottish Property Market
As we start the new year, we take a look at what potentially lies ahead for the Scottish property market in 2017.
Across East Central Scotland in 2016, we saw property prices steadily rise, with reports showing prices had risen from September to November 2016 by 4.3% compared with the same period of 2015.
We’d expect to see this steady trend continue into 2017.
In 2016, we saw a reduction of around 8.3% in the number of properties coming to market in East Central Scotland, comparing September to November year on year. However, to put these figures into perspective, the volume of property sales in August were down by 46% compared to Aug 2007, prior to the recession.
As we enter 2017, there is very little evidence to suggest that any wider factors are likely to change the behaviour of landlords or homeowners and the need to buy/sell property or purchase investment properties. There is also the change in tax laws where landlords see a reduction in tax allowance able to them for offsetting mortgage payments against rental income, (which kicks in from April 2017). This means those landlords with a mortgage on the rental property pay more income tax on the rental income. Landlords with large mortgages will see a significant loss of profit after they have paid tax and many may be forced to sell. Although this change taxes effect from April this year, landlords won’t really feel the effects of this until the tax is due so it is quite possible that the backlash of this change won’t be seen until early to mid 2018.
Competition between sellers and buyers for property remains strong with less properties coming onto the market. Remember in our previous market update, we mentioned that the average selling time was reported to be down by 11 days from September to November 2016 when compared to the same period the previous year. The volume of properties sold reduced in-line with the number of property coming onto the market.
We imagine that this trend will be continued in 2017 with demand out-performing supply and sale times fast compared with recent years.
Looking at mortgage availability, in 2016 we saw a reduction in the Bank of England’s base rate, from the historic low of 0.5% to 0.25%. It isn’t looking likely that the Base Rate will rise again in 2017, and if it does it won’t be by much. This should allow us to see continued mortgage availability and growth in first-time buyers throughout the year.
Looking at the wider market and influences such as the Brexit vote in 2016, which had an effect on the overall economy, we saw a rather immediate, knee-jerk reaction on share prices and exchange rates however, most of these markets have now recovered. It is too early to predict what the outcome will be of the current Brexit negotiations at this stage for the longer term but we will continue to keep you updated as and when more information comes to light.
Over the coming year, we expect to see a similar year to 2016, if not stronger in the Scottish property market. With property sale prices rising, sale times reducing and buyer demand remaining high, both buyers and sellers should remain confident in being able to get the best price possible for their property in 2017.