Affordability As Important As Location For Property Buyers And Sellers
If you have a mortgage, you will know only too well that interest rates have been steadily rising. As I write, the Bank of England has raised its base rate from 4.5% to 5% – the highest since 2008.
Depending on your circumstances, the impact on your personal cost of living expenses will vary. Unfortunately, as some lenders are now setting their 2-year fixed rate residential mortgage deals at an average of over 6% and a 5-year fixed rate mortgage at an average of 5.82%, tens of thousands of property owners in Scotland do face a tricky balancing act with household finances in the months ahead.
I’m always wary of putting too much weight on statistics, but I do believe it’s important to consider the current trends in the Scottish property market to understand how buyers and sellers may be reacting to continual mortgage rate increases and as part of the ongoing cost of living crisis.
INSIGHT TO SCOTLAND’S HOUSE PRICES
The latest UK House Price Index Scotland: April 2023 (published 21 June 2023) reports that in the 12 months to April this year, average house prices in Scotland increased by 2% to £187,150. However, the volume of transactions (compared to February 2022) is down over 16% in Scotland. Therefore, even this quick snapshot of the property market highlights that it’s a mixed, constantly changing landscape.
From a macro-economic perspective, I do wonder if older property owners in large semi-detached properties and seeking greater liquidity to enjoy in retirement will increasingly be motivated to sell and downsize. After all, further analysis reveals that Scotland-wide, the average 12-month (April 2022-April 2023) price change was greatest for semi-detached homes (up 3.3% to £200,959) and detached homes (up 2.1% to £337,568). By comparison, over the same period, flats were up 1.6% to £127,846.
Based on the same statistical source, property owners looking to sell in East Lothian may be buoyed by the impressive 17.2% annual price in their local authority area over the April 2022-April 2023 period and where the average property price is £333,715. City of Edinburgh continues to be strong with a 3.7% increase to £330,481.
It’s notable that the likes of West Lothian (up 6.3% to £204,790), Stirling (up 3.5%), Argyll & Bute (increase of 7.3% to £187,470), Perth & Kinross (3.6% to £236,642) and Renfrewshire (4.8% to £150,237) are also seeing increases in house values. This may reflect an appetite for buyers continuing to seek more space and value in rural and semi-rural areas that can still be commutable to major towns and cities.
LOCATION AND AFFORDABILITY
The above is potentially great news if you are planning to sell your home in the likes of East Lothian, Edinburgh and Argyll & Bute and even wish to downsize. However, from a buyer’s perspective, as borrowers face increasing mortgage outlays, will those who seek more space and ‘bang for their buck’ be drawn towards properties in other areas of Scotland that offer a means to balance climbing the property ladder with affordability?
A glance at the latest UK House Price Index Scotland: April 2023 (published 21 June 2023) underlines that while the local authority area of Inverclyde (that includes the towns of Gourock and Greenock) continues to be the most affordable area to get a foot on the housing ladder, it’s also the local authority where there has been a huge increase in annual average property price (12% to £119,112).
Easily commutable to Glasgow and with towns and villages either overlooking the Firth of Clyde or a stepping-stone from the west coast, it may be that Inverclyde is increasingly attracting home buyers who seek affordable living with a wide range of amenities.
Equally, if you are willing to buy into a market where property prices are lower due to a number of external factors, arguably including changes in the employment market, it’s notable that City of Aberdeen (down 7% to £133,954) and even Falkirk (down 2.3% to £158,131) may offer value if you don’t plan to move again in the short term.
It’s again important to reiterate that the above statistics should only be treated as a guide. Ultimately, every seller and buyer of a property will have their own priorities and ‘wish list’ including the type of property and location.
However, in my opinion, it appears that whatever the type of property you own or wish to purchase, for many people in Scotland the ongoing upward shift in mortgage rates will ensure there’s the need to balance location and desired type of property with the key issue of affordability.
Andrew MacKenzie is a qualified Chartered Surveyor with over 20 years’ experience within the Scottish Property market. He specialises in all types of residential valuations including Home Reports, Private Valuation reports and Development Appraisals.
Outstanding service and very quick turnaround from Andrew and the team. Would highly recommend this company for anyone requiring a fast, professional and efficient service.
19:27 03 Oct 23
19:11 09 Jul 23
Thank you Home Report Company, the surveyor who was sent over for our house valuation report was great. It was nice to be able to welcome a well-mannered, friendly and professional person to our home.For those looking for chartered surveyors to carry out a home report or valuation, I highly recommend this company. They have been very helpful, polite and punctual - and made life that little bit easier during a difficult time in our family. Thank you again.
james “TechnixJim” F.
06:43 26 Jun 23
I needed a survey done quick and contacted home report company,Andrew came within 2 days,no messing about and got my survey paperwork next day via email,excellent company,thank you andrew.all the best jim.
18:15 23 Jun 23
I have recently instructed the Home Report Company to complete a survey for me. From my first initial enquiry up until receiving my report I have nothing but high praise. I was given a quote, a prompt appointment was made and the survey completed. Andrew, the surveyor, was very professional and also very smiley and reassuring. He went about the survey with minimal intrusion or fuss and he also liked my dog 😊. Highly recommend.
16:47 09 Jun 23
Andrew Mackenzie from home report company did our home report very professional and polite.This is the second time I have used home report company and mr Mackenzie has done both reports.The price charged was very competitive and by far the cheapest I enquired about, I would definitely recommend the home report company for your home report.
15:34 28 Apr 23
10:58 05 Apr 23
Perfect, exactly what we needed to sell our home, very quick, helpful and at an excellent price! Would highly recommend!
21:36 22 Mar 23
Friendly and professional service. Andrew was very professional and answered any questions I had. I received the completed home report the next day, after first receiving the draft version.
Steve “Steve J” J.
10:47 16 Mar 23
Very friendly and helpful surveyor who produced an honest, factual report. Survey was organised very quickly, was reasonably priced (compared to other quotes) and the report was produced quickly after the survey. No complaints!