Blog: The impact of Brexit on the residential property market

Wilson Hunter, head of residential at Gillespie Macandrew solicitors looks ahead to what is in store for Scotland’s housing market in the age of Brexit.

History clearly shows that the Residential Property market doesn’t react well to periods of economic uncertainty and it would be reasonable to assume that holding a Scottish Independence referendum, Scottish General Election, Brexit Referendum and UK General Election in successive years since 2014 would have seen the market drop dramatically.

However to date all evidence appears to contradict that assumption and certainly at this stage it’s too early to say that Brexit alone has had a negative effect on the Scottish market place. That’s not to say that it won’t happen and there’s already evidence of property prices in the south of England starting to fall. Traditionally when the property market in the south-east of England sneezes it takes about 12 months for us in Scotland to catch a cold.

Some facts are indisputable. The property market across Scotland is still about half the size it was in 2006/7 when it was at its peak. That lack of properties being registered for sale means that the continuing demand is not being met and that has been the most significant factor in keeping prices moving in an upwards direction.

Homeowners are moving because they have to move - a larger family or a change of job being the two main drivers. There’s certainly a fall in the number of sales at the top end of the market (properties over £1,000,000) however that drop is not the result of Brexit - it simply reflects the impact of the greatly increased costs of purchasing and that slowdown in top end sales had already started long before the Brexit vote was announced.

It’s early days in the Brexit negotiation process and to date the property market in East Central Scotland appears to be impervious to the surrounding uncertainty. Lenders are still lending and interest rates remain low which combined with a poor supply of available property means that prices are still edging upwards. If, as we go further into the negotiations with the EU, inflation continues to surge, interest rates go up and the pound weakens then things may change but for now it remains a seller’s market and the market is in good shape.

Residential property is still regarded by most as a “safe” investment and the Edinburgh market in particular should continue to attract investors from home and abroad.