Brexit effect weighs heavy on Scottish housing market
Uncertainty caused by Brexit is leading buyers and sellers in Scotland to sit tight in increasing numbers, according to the November 2018 RICS UK Residential Market Survey.
The results from the latest survey show a weaker trend in sales than previous months with the headline indicators for demand and supply falling once again, as almost half of respondents cite political uncertainty caused by Brexit as impacting the UK housing market.
A net balance of 12 per cent more chartered surveyors reported a drop in demand for new homes across Scotland for the second consecutive month in November, with many comments attributing this to Brexit uncertainty. Another contributing factor is the continued limited choice of properties for sale. The number of new properties being listed for sale has been in negative territory in Scotland since March 2017.
With little choice for new buyers and fewer people interested in moving, the number of agreed sales stalled in November. Across the UK the headline net balance moved to -15 per cent from -10 per cent and this sentiment is reflected in almost all areas of the UK.
Looking ahead, contributors don’t see any change on the horizon. Sales expectations, for the coming three months turned negative for the first time this year in Scotland, with a net balance of 12 per cent of respondents expecting sales of homes to fall in the coming three months.
The impact of softer demand is also visible in the key price balance which slipped from -10 per cent to -11 per cent in November across the UK. As seen in previous months, the regional picture remains varied, with house prices falling most notably in London, South East and East Anglia whilst the South West, East Midlands and North East are broadly flat. On a more positive note, price rises were seen in Scotland, although at a more-steady pace than the last two years.
In the Scottish lettings market, demand from prospective tenants is holding broadly steady, however, the number of new instructions continues to fall signalling a further decline in the supply of fresh rental stock. As a result, rents are expected to rise modestly over both the three and twelve-month horizons.
Simon Rubinsohn, RICS chief economist, said: “It is evident from the feedback to the latest RICS survey that the ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market. Indeed, I can’t recall a previous survey when a single issue has been highlighted by quite so many contributors.
“Caution is visible among both buyers and vendors and where deals are being done, they are taking longer to get over the line. Significantly the forward-looking indicators reflect the suspicion that the political machinations are unlikely to be resolved anytime soon. The bigger risk is that this now spills over into development plans making it even harder to secure the uplift in the building pipeline to address the housing crisis.”
Hew Edgar, RICS interim head of policy, said: “RICS shares the resounding sentiment of frustration from our professionals operating in the UK’s residential sector; and we are not surprised by this month’s outcome. Brexit was always going to be a very politically charged debate, but the current style of politics, and the high level of political uncertainty, is significantly impacting the housing market and built environment to the detriment of the public.
“Prior to the referendum, our research indicated that Brexit would only impact the higher end of residential market, as the lower and middle market areas are domestically driven. Now, however, it appears that those looking to buy and sell homes across the price spectrum, as well as those looking to invest in the UK’s residential sector, are putting off decisions until there is more certainty.
“Parliamentarians need to work together to make sure politics, the future deal and our relationship with the EU works for the build environment.”